SJVN LIMITED - IDBI Capital

SECTION I – GENERALDEFINITIONS AND ABBREVIATIONSUnless the context otherwise indicates, the following terms shall have the following meanings in this RedHerring Prospectus and reference to any statute or regulations or policies shall include references to anyamendments or re-enactments made from time to time.In this Red Herring Prospectus, unless the context otherwise indicates, all references to “SJVN” or “Company”are to SJVN Limited, a public limited company incorporated in India under the Companies Act, with itsregistered and corporate office located at Himfed Building, New Shimla HP-171 009, India.Company Related TermsTermArticles of Association or Articles orAoAAudit CommitteeAuditorsBoard or Board of DirectorsCorporate OfficeDirectorsEx-bus saleable design energyLuhri projectProjectsMemorandum of Association orMemorandumPromoter(s) or Shareholder(s)Registered Officewe , us, our or our CompanyDescriptionThe articles of association of our Company, as amended.The committee of directors constituted as our Company's audit committee in accordance withClause 49 of the Listing Agreement to be entered into with the Stock Exchanges. For details seesection titled “Our Management” on page 104.The statutory auditors of our Company, M/s. Hingorani M & Co., Chartered Accountants.The board of Directors of our Company duly constituted from time to time.The corporate office of our Company, located at Himfed Building, New Shimla, Shimla (HP)-171009.The Directors of our Company, unless otherwise specified.The quantum of energy which could be generated in a 90% dependable year with 95% installedcapacity of the generating station delivered to the grid at the transmission line.The proposed run-of-the river project expected to be located on the Sutlej River, downstreamfrom the Rampur Project with an indicative capacity of 775 MW.The identified projects of our Company situated in the state of Uttarakhand, namely, DevsariProject, Naitwar Mori Project, and Jhakol Sankri Project.The memorandum of association of our Company, as amended.The President of India, acting through the Ministry of Power, Government of India and theGovernor of Himachal Pradesh, acting through the Department of Multi Purpose Projects andPower, Government of Himachal Pradesh.The registered office of our Company, which, as at the date of this Red Herring Prospectus, islocated at Himfed Building, New Shimla, HP-171 009.Relates to SJVN Limited.Offer Related TermsTermAllotted/Allotment/AllotAllotteeApplicationApplication Supported by BlockedAmount or ASBAASBA AccountASBA BidderASBA Bid cum Application FormASBA NRI BidderASBA Revision FormDescriptionUnless the context otherwise requires, the transfer of Equity Shares to successful Bidderspursuant to the Offer.A successful Bidder to whom the Equity Shares are Allotted.The completion of the Bid cum Application Form or ASBA Bid cum Application Form by aBidder with an intent to apply for Equity Shares pursuant to the Offer.An application for subscription to an offer containing an authorisation to block the applicationmoney in a bank account as detailed in the Section titled “Offer Procedure- Offer Procedurefor ASBA Bidders” on page 1911.Account maintained with an SCSB which will be blocked to the extent of the Bid Amount.A Bidder not being a QIB, who intends to apply to the Offer under ASBA Process.The application form, whether physical or electronic in terms of which an ASBA Bidder shallmake a Bid pursuant to the terms of the Red Herring Prospectus and which contains anauthorisation to block the Bid Amount in an ASBA Account.An ASBA Bidder who is not a resident of India.The form used by ASBA Bidders to modify the number of Equity Shares or the Bid Price in anyof their ASBA Bid cum Application Forms or any previous ASBA Revision Form(s).i

TermDP IDEligible NRIEligible EmployeesEmployee DiscountEmployee NumberEmployee Reservation PortionEquity SharesEscrow AccountEscrow AgreementFirst BidderFloor PriceIDBICAPSIDFC CapitalIPO Grading AgencyJM FinancialMargin AmountMoP or MOPMutual FundsMutual Fund PortionNet OfferNon-Institutional BiddersNon-Institutional PortionDescriptionDepository Participant’s Identity.An NRI resident in a jurisdiction outside India where it is not unlawful to make an offer orinvitation under the Offer and in relation to whom the Red Herring Prospectus constitutes aninvitation to subscribe for the Equity Shares.A permanent and full-time employee of our Company or a Director of our Company (excludingany person not eligible under applicable laws, rules, regulations and guidelines), as on the dateof filing of the Red Herring Prospectus with the RoC, who are Indian nationals and are presentin India as on the date of submission of the Bid cum Application Form and who continue to bein the employment of our Company until submission of the Bid cum Application Form.Discount of upto Rs [•] to the Offer Price determined pursuant to the completion of the BookBuilding Process given to the Eligible Employees.A unique identification number allotted to each employee of our Company.3,350,000 Equity Shares representing 0.81% of the Offer reserved to be allocated to EligibleEmployees .The Equity Shares of our Company with a face value of Rs. 10 each.An account to be opened with the Escrow Collection Bank(s) for the Offer and in whose favourthe Bidder (excluding ASBA Bidders) will issue cheques or drafts or RTGS instructions inrespect of the applicable Margin Amount when submitting a Bid and the remainder of theamount payable by the Bidder for the Allotment, if any.The agreement to be entered into among our Company, the Selling Shareholder, the Registrar tothe Offer, the BRLMs, Syndicate Members and the Escrow Collection Bank(s) for collection ofthe Bid Amounts and, where applicable, remitting refunds of the amounts collected to theBidders (excluding ASBA Bidders) on the terms and conditions thereof.The Bidder whose name appears first in the Bid cum Application Form or Revision Form or theASBA Bid cum Application Form or the ASBA Revision Form as the case may be.The lower end of the Price Band, below which the Offer Price will not be finalised and belowwhich no Bids will be accepted and which shall not be lesser than the face value of the EquityShares, including revisions thereof.IDBI Capital Market Services Limited.IDFC Capital Limited.Credit Analysis and Research Limited or CAREJM Financial Consultants Private Limited.The amount paid by the Bidder at the time of submission of the Bid and which may rangebetween 10% and 100% of the Bid Amount.Ministry of Power, Government of India.Mutual funds registered with the SEBI under the SEBI (Mutual Funds) Regulations, 1996, asamended.5% of the QIB Portion or 12,349,500 Equity Shares, available for allocation to Mutual Fundsonly, on a proportionate basis.The Offer less the Employee Reservation Portion, being 411,650,000 Equity Shares.All Bidders including Sub-Accounts which are foreign corporates or foreign individuals that arenot QIBs or Retail Individual Bidders.The portion of the Net Offer, of not less than 10% of the Net Offer or 41,165,000 Equity Sharesat the Offer Price, available for allocation to Non-Institutional Bidders.Non-Resident Indian or NRI A person resident outside India, as defined under the Foreign Exchange Management Act, 1999,and the FEMA (Transfer or Issue of Security by a Person Resident Outside India) Regulations,2000, as amended.Offer or Offer for SaleOffer AgreementOffer PricePay-in DateAn Offer for Sale of 415,000,000 Equity Shares by the Selling Shareholder, pursuant to theterms of the Red Herring Prospectus and the Prospectus.The agreement dated February 25, 2010 among our Company, the Selling Shareholder and theBRLMs, pursuant to which certain arrangements have been agreed to in the context of the Offer.The final price at which Equity Shares will be Allotted. The Offer Price will be decided by ourCompany and the Selling Shareholder in consultation with the BRLMs.With respect to the QIB Bidders, the Bid/Offer Closing Date or last date specified in the CANsent to Bidders.iii

TermPay-in PeriodDescriptionExcept with respect to ASBA Bidders, those Bidders whose Margin Amount is 100% of theBid Amount, the period commencing on the Bid/Offer Opening Date and extending until theBid/Offer Closing Date; andWith respect to Bidders, whose Margin Amount is less than 100% of the Bid Amount, the periodcommencing on the Bid/Offer Opening Date and extending until the last date specified in theCAN.Price BandPricing DateProspectusPublic Offer AccountQIB Margin AmountQIB PortionQualified Institutional Buyers or QIBsRed Herring Prospectus or RHPRefund AccountRefund Bank(s)Registrar to the OfferRetail DiscountRetail Individual BiddersRetail PortionRevision FormROC or RoCSBI CAPSSelf Certified Syndicate Bank or SCSBSelling ShareholderStock ExchangesThe price band between the Floor Price of Rs. [●] per Equity Share and the Cap Price of Rs. [●]per Equity Share, including all revisions thereof.The date on which our Company and the Selling Shareholder in consultation with theBRLMs finalise the Offer Price.The prospectus of our Company to be filed with the RoC relating to the Offer post the PricingDate pursuant to Section 60 B of the Companies Act, containing, inter alia, the Offer Price thatis determined at the end of the Book Building Process on the Pricing Date, including anycorrigendum thereof.The bank account opened with the Bankers to the Offer by our Company under Section 73 of theCompanies Act to receive money from the Escrow Accounts on the Designated Date and wherethe funds shall be transferred by the SCSBs from the ASBA Accounts.An amount representing at least 10% of the Bid Amount being the amount QIBs are required topay at the time of submitting a Bid.The portion of the Net Offer being at least 60% of the Offer or 246,990,000 Equity Shares at theOffer Price to be allocated to QIBs.Means a mutual fund, venture capital fund and foreign venture capital investor registered withthe Board, a foreign institutional investor and Sub-Account (other than a Sub-Account which isa foreign corporate or foreign individual), registered with the Board, a public financialinstitution as defined in section 4A of the Companies Act, a scheduled commercial bank, amultilateral and bilateral development financial institution, a state industrial developmentcorporation, an insurance company registered with the Insurance Regulatory and DevelopmentAuthority, a provident fund with minimum corpus of two hundred and fifty million rupees, apension fund with minimum corpus of two hundred and fifty million rupees, NationalInvestment Fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005 of theGovernment of India published in the Gazette of India or insurance funds set up and managed bythe army, navy or air force of the Union of India.This red herring prospectus issued by our Company in accordance with Sections 56, 60 and 60Bof the Companies Act and the SEBI ICDR Regulations which does not have completeparticulars of the price at which the Equity Shares are offered and the size of the Offer. The RedHerring Prospectus will become a Prospectus upon filing with the RoC after the Pricing Date.The account opened with (an) Escrow Collection Bank(s), from which refunds, if any, of thewhole or part of the Bid Amount (excluding to ASBA Bidders), if any shall be made.The bank(s) which is a/ are clearing members and registered with the SEBI as Bankers to theOffer, at which the Refund Accounts will be opened, in this case being, HDFC Bank Limited,Kotak Mahindra Bank Limited and State Bank of India.Link Intime India Private Limited.Discount of up to Rs [•] to the Offer Price determined pursuant to the completion of the BookBuilding Process given to Retail Individual Bidders.Individual Bidders (including HUFs and Eligible NRIs) who have not Bid for Equity Shares foran amount more than Rs. 100,000 in any of the bidding options in the Offer.The portion of the Net Offer being not less than 30% of the Net Offer, or 123,495,000 EquityShares at the Offer Price, available for allocation to Retail Individual Bidders on a proportionatebasis.The form used by Bidders excluding ASBA Bidders to modify the number of Equity Shares orthe Bid Price in any of their Bid cum Application Forms or any previous Revision Form(s).Registrar of Companies, Punjab, Himachal Pradesh and Chandigarh.SBI Capital Markets Limited.The banks which are registered under SEBI (Bankers to an Offer) Regulations, 1994 and whichoffers the services of ASBA, including blocking of bank account, a list of which is available onhttp://www.sebi.gov.in/pmd/scsb.pdfThe President of India acting through the Ministry of Power, Government of India.The BSE and the NSE.iv

TermSub- AccountSyndicateSyndicate AgreementSyndicate Member(s)Transaction Registration Slip or TRSUnderwritersUnderwriting AgreementWorking DayDescriptionSub-accounts of FIIs registered with SEBI under the SEBI (Foreign Institutional Investor)Regulations 1995 as amended from time to time.Collectively, the BRLMs and the Syndicate Member(s).The agreement among the members of the Syndicate, our Company and the Selling Shareholderin relation to the collection of Bids in the Offer (excluding Bids by the ASBA Bidders).Intermediaries registered with the SEBI and permitted to carry out activities as an underwriter,in this case being JM Financial Services Private Limited, Sharekhan Limited, SBICAPSecurities Limited and IDBI Capital Market Services Limited.The slip or document issued by a member of the Syndicate or the SCSBs (only on demand) to aBidder as proof of registration or revision of the Bid.The BRLMs and the members of the Syndicate.The agreement among our Company, the Selling Shareholder and the Underwriters to be enteredinto on or after the Pricing Date.All days except Saturday, Sunday and any public holiday on which commercial banks in NewDelhi and/or Mumbai are open for business.v

Conventional /General Terms and AbbreviationsTermAARAGMAct or Companies ActASAssistant General ManagerBSECDSLCEICHFCLRADepositoriesDepositories ActDepository Participant or DPDINDRB€ Euro.ECSEGMEPCEPSExecutive DirectorFactories ActFCFCNR AccountFDIFEMAFII (s)Financial Year/Fiscal/FYFVCIGDPGeneral ManagerGoI or GOI or GovernmentGoHPGoU or GOUHEPHPHPSEBHRTHUFIDCIFRSIT&CI.T. ActIndian GAAPIPODescriptionAuthority for Advance Ruling.Annual General Meeting.The Companies Act, 1956 as amended.Accounting Standard issued by the Institute of Chartered Accountants of India.An Assistant General Manager of our Company, as appointedThe Bombay Stock Exchange Limited.Central Depository Services (India) Limited.Chief Electrical Inspector.Swiss Franc.The Contract Labour (Regulation and Abolition) Act, 1970 as amended.NSDL and CDSL.The Depositories Act, 1996, as amended.A depository participant as defined under the Depositories Act.Director Identification Number.Dispute Review BoardElectronic clearing service.Extraordinary general meeting of the shareholders of our Company.Erection, Procurement and CommissioningEarnings per share, i.e., profit after tax for a Fiscal year divided by the weighted average numberof equity shares during the Fiscal year.The Executive Director of our Company, as appointedFactories Act, 1948, as amended.Foreign currency.Foreign Currency Non-Resident Account established in accordance with the FEMA.Foreign direct investment.The Foreign Exchange Management Act, 1999, together with rules and regulations thereunder andamendments thereto.Foreign Institutional Investors (as defined under the Securities and Exchange Board of India(Foreign Institutional Investors) Regulations, 1995, as amended) registered with the SEBI.Period of 12 months ended March 31 of that particular year unless the context otherwise requires.Foreign Venture Capital Investors (as defined under the SEBI (Foreign Venture Capital Investors)Regulations, 2000, as amended) registered with the SEBI.Gross Domestic Product.A General Manager of our Company, as appointedGovernment of India.Government of Himachal Pradesh.Government of Uttarakhand.Hydro-electric project.Himachal Pradesh.Himachal Pradesh State Electricity Board.Head Race TunnelHindu Undivided Family.Interest during construction.International Financial Reporting Standards.Information Technology and Communications.Income Tax Act, 1961, as amended.Generally Accepted Accounting Principles in India.Initial Public Offering (i.e., the Offer).vi

TermKfW, GermanyLICLIBORMATMoAMoEMOSPIMoUN.A.NEFTNJHPS or NJHEP or Nathpa JhakriNon-Resident or NRNRDCNRE AccountNRO AccountNRPCNSDLNSEO&MOCBp.aPANQA&IR&DR&R PolicyRBIRECRHEPRoERoNWRs.RTGSSCRRSEBISEBI ActSEBI FII RegulationsSEBI ICDR RegulationsSEBRSpecial Rupee Account or Non-Resident (Special) Rupee Account orNRSRSTTSupreme CourtTakeover CodeDescriptionKreditanstalt fur Wiederaufbau.The Life Insurance Corporation of India.London Interbank offer rate for U.S. dollars.Minimum Alternate Tax.Memorandum of Agreement.Memorandum of Entry.Ministry of Statistics & Programme Implementation.Memorandum of Understanding.Not Applicable.National Electronic Fund Transfer.The Nathpa Jhakri Power Station situated on the River Sutlej in the State of Himachal Pradesh.A person resident outside India, as defined under the FEMA and includes a Non-Resident Indian.National Research Development Corporation.Non-Resident External Account established in accordance with the FEMA.Non-Resident Ordinary Account established in accordance with the FEMA.Northern Regional Power Committee.National Securities Depository Limited.The National Stock Exchange of India Limited.Operation and Maintenance.A company, partnership, society or other corporate body owned directly or indirectly to the extentof at least 60% by NRIs including overseas trusts in which not less than 60% of the beneficialinterest is irrevocably held by NRIs directly or indirectly and which was in existence on October3, 2003 and immediately before such date was eligible to undertake transactions pursuant to thegeneral permission granted to OCBs under the FEMA. OCBs are not allowed to invest in theOffer.Per annum.Permanent Account Number allotted under the I.T. Act.Quality Assurance and Inspection.Research and Development.Our Rehabilitation and Resettlement Policy, 2007, which is based on the National Resettlementand Rehabilitation Policy, 2007 of the GoI.The Reserve Bank of India.Rural Electrification Corporation Limited.Rampur Hydro-electric project.Return on equity.Return on net worth.Indian Rupees.Real Time Gross Settlement.Securities Contracts (Regulation) Rules, 1957, as amended.Securities and Exchange Board of India constituted under the SEBI Act.Securities and Exchange Board of India Act, 1992, as amended.Securities Exchange Board of India (Foreign Institutional Investors) Regulations 1995, asamended by the SEBI (Foreign Institutional Investors)(Amendment) Regulations, 2008.SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended.Swiss Export Base Rate.Accounts held by Non Resident Indians which carry the same facilities and restrictions as areapplicable to domestic accounts of residents in respect of repatriation of funds held in the accountand/or income accrued thereon with an exception of investment in shares / securities andimmovable property in India, which will be governed by the extant exchange control regulationsapplicable on such investments.Securities Transaction Tax.Supreme Court of India.The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers)Regulations, 1997, as amended.vii

TermDescriptionTariff Policy The Tariff Policy of India 2006TRTTail Race TunnelUSA or U.S.US$ or USDVATw.e.fUnited States of America.U.S. Dollar.Value Added Tax.With effect from.Technical and Industry-Related TermsTermAADAFCCCEACDMCEACERCERCDesign energyDPEDPREIAElectricity Supply ActEMPEPAFCAFLOPGISHRIPPKWhLand Acquisition ActMoEF or MoEFMUMWNAPAFPFCPGCILPIBPPARESSEB(s)SERCSTUTailrace dischargeTECTEATripartite AgreementsDescriptionAdvance Against Depreciation.Annual Fixed Charges.Cabinet Committee on Economic Affairs.Clean Development Mechanism.Central Electricity Authority.Certified Emission Reduction.Central Electricity Regulatory Commission.The quantum of energy which could be generated in a 90% dependable year with 95% installedcapacity of the generating station.Department of Public Enterprises, Ministry of Heavy Industries and Public Enterprises.Detailed Project Report.Environmental Impact Assessment.Electricity (Supply) Act, 1948, as amended.Environment Management Plan.Environment (Protection) Act, 1986 as amended.Forest (Conservation) Act, 1980 as amended.Fire loss of profitGeographic Information System.Human resources.Independent Power Producer.Kilo Watt Hour.Land Acquisition Act, 1894 as amended.Ministry of Environment and Forest, Government of India.Million Units.Mega Watt.Normative Annual Plant Availability Factor.Power Finance Corporation Limited.Power Grid Corporation of India Limited.Public Investment Board.Power Purchase Agreement.Renewal Energy Sources, which includes small hydro, wind and biomass.State Electricity Board(s) and their successor(s), if any, including those formed pursuant torestructuring/unbundling.State Electricity Regulatory Commission.State Transmission Utility.The discharge of water coming out of the machine after generation of electricity.Techno Economic Clearance.Techno Economic Appraisal.Tripartite Agreements executed among the GoI, RBI and the respective State governments.viii

CERTAIN CONVENTIONS, USE OF FINANCIAL INFORMATION AND MARKET DATA ANDCURRENCY OF PRESENTATIONCertain ConventionsAll references in this Red Herring Prospectus to "India" are to the Republic of India. All references in this RedHerring Prospectus to the “US”, “USA” or the “United States” are to the United States of America.Financial DataUnless indicated otherwise, the financial data in this Red Herring Prospectus is derived from our RestatedFinancial Statements as of and for the years ended March 31, 2009, 2008, 2007, 2006, and 2005 and for thenine-month period ended December 31, 2009 prepared in accordance with generally accepted accountingprinciples in India (“Indian GAAP”) and the Companies Act and restated in accordance with the SEBI ICDRRegulations, as stated in the reports of our Auditors included in “Financial Statements” on page F1.Our fiscal year commences on April 1 and ends on March 31, so all references to a particular fiscal year, FY orFiscal are to the twelve-month period ended March 31 of that year. Our financial statements for the years endedMarch 31, 2009 and 2008 were audited by R. Bansal & Co, Chartered Accountants. Our financial statements forthe year ended March 31, 2007 was audited by Raj Gupta & Co., Chartered Accountants, and our financialstatements for the years ended March 31, 2006 and 2005 were audited by Pandey Dua & Mathur, CharteredAccountants. In this Red Herring Prospectus, any discrepancies in any table between the total and the sums ofthe amounts listed are due to rounding off.There are significant differences between Indian GAAP, IFRS and U.S GAAP. Accordingly, the degree towhich the financial statements prepared in accordance with Indian GAAP included in this Red HerringProspectus will provide meaningful information is entirely dependent on the reader’s level of familiarity withIndian accounting practices, Indian GAAP, the Companies Act and the SEBI ICDR Regulations. Any relianceby persons not familiar with Indian accounting practices, Indian GAAP, the Companies Act and the SEBI ICDRRegulations on the financial disclosures presented in this Red Herring Prospectus should accordingly be limited.Our Company and the Selling Shareholder have not attempted to explain those differences or quantify theirimpact on the financial data included herein, and our Company and the Selling Shareholder urge you to consultyour own advisors regarding such differences and their impact on the financial data of our Company. For asummary of certain principal differences between Indian GAAP, IFRS and U.S. GAAP, please see section titled“Summary of Differences between Indian GAAP, IFRS and U.S. GAAP” on page 32.Any percentage amounts, as set forth in “Risk Factors,” “Business,” and “Management’s Discussion andAnalysis of Financial Condition and Results of Operations” and elsewhere in this Red Herring Prospectus,unless otherwise indicated, have been calculated on the basis of our Restated Financial Statements prepared inaccordance with Indian GAAP and rounded to the nearest decimal place.Currency and Units of PresentationAll references to “Rupees” or “Rs.” are to Indian Rupees, the official currency of the Republic of India. Allreferences to “US$” or “USD” or “U.S. dollar” are to United States Dollars, the official currency of the UnitedStates of America. All references to “€” are to Euros, the single currency of the participating member states inthe Third Stage of the European Economic and Monetary Union of the Treaty Establishing the EuropeanCommunity, as amended from time to time. All references to “NOK” or “Norwegian Krone” are to theNorwegian Krone, the official currency of the Kingdom of Norway.Market and Industry DataMarket and industry data used throughout this Red Herring Prospectus has been obtained from variousgovernment and industry publications including those published by the MoP, the CEA and the PlanningCommission of India. These publications generally state that the information contained therein has beenobtained from sources believed to be reliable but that such information has not been independently verified andthere can be no assurance as to the accuracy and completeness of included information. Although each of ourCompany and the Selling Shareholder believes the market and industry data used in this Red Herring Prospectusis reliable, it has not been independently verified. The data used in these sources may have been re-classified forpurposes of presentation. Data from these sources may also not be comparable. The extent to which the marketand industry data is presented in this Red Herring Prospectus is meaningful depends upon the reader’sfamiliarity with and understanding of the methodologies used in compiling such data. There are no standard datagathering methodologies in the industry.ix

Neither our Company nor the Selling Shareholder has independently verified any of the data from third partysources or ascertained the underlying economic assumptions contained therein.In addition, statements made in relation to installed capacity and electricity generated for each of the years setout in this Red Herring Prospectus are based on information regarding such matters published by the MoP andthe NRDC and are based in part on data submitted by power producers such as our Company. Variousoperational data relating to our Company such as gross generation, ex-bus generation, saleable energy and plantavailability factor has been included, and the manner in which such statistical data has been calculated has beendescribed elsewhere in this Red Herring Prospectus. You should note, however, that other companies in thehydroelectric and energy industry sectors may categorize, calculate and present such data in a different mannerand therefore, you should use caution in comparing such data with data presented by other companies, whichmay not be directly comparable.x

FORWARD-LOOKING STATEMENTSThis Red Herring Prospectus contains forward looking statements and information that involve risks,uncertainties and assumption. Forward-looking statements are statements that concern plans, objectives, goals,strategies, future events or performance and underlying assumptions and other statements that are other thanstatements of historical fact, including, but not limited to, those that are identified by the use of words such as“will,” “aim,” “will likely result,” “believe,” “expect,” “will continue,” “anticipate,” “estimate,” “intend,”“plan,” “seek to,” “future,” “objective,” “project,” “should,” “will pursue” and similar expressions or variationsof such expressions.The future events referred to in these forward-looking statements involve known and unknown risks,uncertainties and other factors, some of which are beyond the control of our Company, which may cause theactual results, performance, achievements or industry results to be materially different from any future results,performance or achievements expressed or implied by the forward-looking statements. These forward-lookingstatements are based on numerous assumptions regarding Government and state government policies in theenergy sector, our present and future business strategies, and the environment in which our Company willoperate in the future, and are not a guarantee of future performance.Important factors that could cause actual results, performance or achievements to differ materially from those inthe forward looking statements set out herein include, among others, the following:• general economic and political environment and changes in laws and regulations that apply to theIndian, regional or global mining industries, including with respect to custom duties, excise duties orenvironmental regulations;• our ability to implement our business strategies and successfully tender for or obtain new rights for thedevelopment and operation of hydroelectric power projects;• geological, weather and hydrological conditions affecting our projects;• fluctuations in the selling prices of energy, including due to factors such as plant availability, local,regional and global supply and demand;• the price of raw materials, equipment, machinery, spare parts, and engineering and constructionservices, including factors influencing their prices, such as regional and global supply and demand;• the effects of competition in the geographic and business areas in which we conduct our operations;• the effects of changes in laws, regulations, taxation or accounting standards or practices, including inparticular in electricity tariff regulations, project tender processes, environmental regulations andcompliance costs;• the effects of, and changes in, the regulatory policy of the Government related to the energy industry,public sector and private sector investment and generally;• the ability to maintain or increase performance while controlling expenses and plant downtime;• environmental compliance and remediation, including rehabilitation and reclamation programs;• our ability to obtain raw materials, equipment, machinery or spare parts from its major suppliers in thetime frame anticipated or at all and significant increases in the costs of those raw materials, equipment,machinery or spare parts;• technological changes that affect hydroelectric power projects;• effects of international and domestic political events on our business;• the ability of third party contractors to perform in accordance with contractual terms and specifications;• labor unrest or other similar situations;xi

• our relationships with local governments, regulators, authorities and the local community; and• our success at managing risk associated with the above factors.In addition, the expectations of our management with respect to our ability to meet the performance targets setby the CERC and applicable to us are also subject to risks arising from the inherent difficulty of predicting siltand sedimentation levels, water supply conditions, weather conditions and other factors which may disrupt ouroperations. Estimated installed capacity levels for our projects which are in the construction or implementationstage are based on internal surveys and investigations, including estimates of design energy based onhydrological studies and historical data, as well as studies commissioned from third party consultants and whichare submitted to the relevant authorities for their approval.Any forward-looking statement or information contained in this document speaks only as of the date thestatement was made.All of the forward-looking statements made herein and elsewhere are qualified in their entirety by the riskfactors discussed in “Risk Factors” and other cautionary statements appearing in “Management’s Discussion andAnalysis of Financial Condition and Results of Operations” and “Industry.” These risk factors and statementsdescribe circumstances that could cause actual results to differ materially from those contained in any forwardlookingstatement. We do not intend to update forward-looking statements made herein to reflect actual resultsor changes in assumptions or other factors that could affect those statements.For a further discussion of factors that could cause actual results to differ, see section titled “Risk Factors” onpage xiii. By their nature, certain market risk disclosures are only estimates and could be materially differentfrom what actually occurs in the future. As a result, actual future gains or losses could materially differ fromthose that have been estimated. Neither our Company, the Selling Shareholder, the BRLMs nor the members ofthe Syndicate, nor any of their respective affiliates have any obligation to update or otherwise revise anystatements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlyingevents. In accordance with SEBI requirements, our Company, the Selling Shareholder and the BRLMs willensure that investors in India are informed of material developments until such time as the grant of tradingpermission by the Stock Exchanges for our Equity Shares Allotted pursuant to the Offer.xii

SECTION IIRISK FACTORSAn investment in equity shares involves a high degree of risk. Potential investors in our Equity Shares are urgedto consider carefully the following specific investment considerations as well as the other material contained inthis Red Herring Prospectus before making an investment in our Equity Shares.You should carefully evaluate each of the following risk factors (which are not intended to be exhaustive) andall other information set forth in this Red Herring Prospectus before deciding to invest in our Equity Shares.You should read this section in conjunction with the sections titled “Our Business” and “Management’sDiscussion and Analysis of Financial Condition and Results of Operations” on pages 58 and 127respectively, as well as other financial and statistical information contained in this Red Herring Prospectus.Some of the following risk factors relate principally to the industry in which we operate and our business ingeneral. Other considerations relate principally to general economic and political conditions, the securitiesmarket and ownership of our Equity Shares, including possible future sales of our Equity Shares. Unlessotherwise stated in the risk factors set forth below, we are not in a position to quantify the financial or otherrisks mentioned therein.If any one, or some combination of the following risks actually occur, our business, prospects, profitability,financial condition, and results of operations could be materially and adversely affected. In such circumstances,the market price of our Equity Shares could decline and you may lose all or part of your investment.Internal Risk Factors- Risks Relating to Our Business1. We are presently involved in certain litigation proceedings and other legal, regulatory andarbitration proceedings.There are certain outstanding legal proceedings involving our Company pending at different levels ofadjudication before various courts, tribunals, authorities and appellate bodies in India. Should any newdevelopments arise, such as changes in applicable Indian laws or rulings against us by appellate courtsor tribunals, we may need to make provisions in our financial statements, which may increase ourexpenses and current liabilities. We can give no assurance that these legal proceedings will be decidedin our favour. Any adverse decision may have a significant effect on our business, financial conditionand results of operations. The following table summarizes certain litigation matters pending againstour Company and the amounts which are in dispute:S. No. Nature of Proceeding Number of Cases Disputed Amount(Rs. million)1. Criminal cases 3 -2. Service Tax 1 123.583. Income Tax 3 -4. Litigation relating to contracts 52 5902.075. Litigation relating to land acquisition 89 673.316. Service matters 13 -7. PIL 1 -8. Other civil proceedings 13 7.19Total 175 6706.15There are currently three criminal proceedings pending against our Company and its employees. Thefirst is a revision petition filed by the state of Himachal Pradesh in the Additional District and SessionsJudge, for the setting aside of the order passed by the Judicial Magistrate, Shimla, on the grounds thatthe proceeding initiated against our Company under Section 6 of the Himachal Pradesh Instrument(Control & Noises) Act, 1969 was wrongly and illegally dropped by the Judicial Magistrate, Shimla.The second action was instituted pursuant to Sections 336/337 and 304A of the Indian Penal Codeagainst Mr. Davinder Wadhera, Additional General Manager of our Company in the Court of the ChiefJudicial Magistrate, Kinnaur at Recong Peo, on the ground of the death of a labourer who was washedaway due to alleged silt flushing conducted by our Company in the river near Chaura. The third actionhas been filed against our Company by an individual under Section 133 of the Code of CriminalProcedure, 1973 before the Sub-divisional Magistrate at Bhavanagar inter alia alleging that the housesin the Nigulsari village were being damaged as a result of the wrongful dumping of muck and heavyblasting carried out by our Company for NJHPS. These actions are currently pending against ourCompany, and there can be no assurance that they will be decided in our favour, nor can there be anyassurance that similar proceedings will not be instituted against our Company in the future.xiii

Further, the proceedings involving our Company substantially comprise disputes arising out of majorcivil contracts pertaining to the NJHPS and the Rampur Project and there is no assurance that similarproceedings will not be initiated against us in the future. We may also be exposed to claims for deathand disability and other forms of litigation arising out of the development and construction of ourhydroelectric projects, including with respect to the actions of our contractors.For further information, see section titled “Outstanding Litigation and Material Developments” onpage 146.2. We may be subject to future litigation, including public interest litigation, instituted in connectionwith the environmental impact of our projects or in connection with land acquisition activitiescarried out with respect to such projects.Generally, the development and construction of a hydroelectric project may have significantconsequences on the surrounding environment, including on the ecosystem of the affected areas,grazing, logging, agricultural activities, mining and land development. The ecological impact of aparticular hydroelectric project on its surroundings typically depends on variables such as the size andflow rate of the river or tributary where the project is located, the climatic and habitat conditions thatexist, the type, size, design and operation of the project, and the location of the project relative to otherhydroelectric power projects. The construction of a hydroelectric project will generally result insignificant changes to water levels in the river or tributary which has been dammed for the purposes ofthe project or where storage projects have been constructed, changes in sedimentation levels affectingboth upstream and downstream habitat conditions, increased erosion and other environmental changes.The full extent of environmental consequences associated with a particular hydroelectric project isdifficult to determine and estimate, and is also dependent on continuing environmental measures takento address such consequences.In addition, the development and construction of hydroelectric power projects in certain areas mayrequire the displacement and/or relocation of local communities or may otherwise disrupt theiractivities and/or livelihoods, especially during the project construction period. One of the primary risksaffecting the success of our hydroelectric power projects relates to the land acquisition process. Wemay acquire land for the development of our projects through the statutory land acquisition processunder the Land Acquisition Act. Pursuant to the statutory land acquisition process, the Governmentwould assume responsibility for acquiring the land required for the development of a project, althoughthe cost of such land acquisition and related financing costs will be borne by the project developer. Theland is transferred to us by the Government when all the designated land has been acquired, and we arerequired to make stage-based payments to the relevant Government authorities with respect to landacquisition costs for the land designated by us for acquisition.There can be no assurance that we will not be subject to litigation and/or other forms of oppositionfrom public interest groups, local communities or non-governmental organizations, including publicinterest litigation, in relation to the environmental impact of our projects or in relation to landacquisition and construction activities for our projects and the consequent displacement andrehabilitation of affected communities. Any such claims may delay or prevent us from implementingour projects, or may require us to bear substantial compliance, rehabilitation or other project-associatedcosts, or other significant liabilities, and may result in significant increases to our project developmentcosts.For example, public interest litigation has been instituted against us in Nepal, alleging that the tenderprocedures by which the Nepalese government selected our Company to develop and operate the Arun-III Project are unconstitutional and invalid. This is currently pending for adjudication before theSupreme Court of Nepal. In addition, there are presently 126 court proceedings pending against ourCompany with respect to land acquired for our various projects under the Land Acquisition Act, themajority of which relate to demands for increased compensation by landowners. For details see sectiontitled “Outstanding Litigation and Material Developments” on page 146.3. Our financial performance is dependent on the NJHPS, which is our only operational project, andwe are dependent on the NJHPS for our revenues and operating cashflows and to finance thedevelopment of our other hydroelectric power projects.As at the date of this Red Herring Prospectus, all of our revenues are generated from the NJHPSlocated in the state of Himachal Pradesh on the Sutlej River, which is one of the principal tributaries ofthe Indus river in the southwest Himalayas. All of the power generated and supplied by our Companyxiv

to our customers is presently generated by this project. Consequently, any interruption in the operationsof the NJHPS would potentially have a greater negative impact on our Company than if our operationswere spread among a larger number of facilities in India or in the rest of the world. In particular, anylabor unrest, equipment failure, industrial accidents, difficulties in obtaining spare parts or equipment,natural disasters, compliance with applicable environmental, health and safety regulations, weather andother contributory climatic conditions, high sedimentation levels, excessively low or excessively highwater supply or other factors which would result in any disruptions at the NJHPS, may have ansignificant and adverse impact on our business, operations, cashflows, profitability, financial conditionand results of operations.We are consequently dependent on revenues and cashflows from the NJHPS to finance thedevelopment and construction of our pipeline of projects. In the event of significant disruptions to ouroperation of the NJHPS, our ability to continue the development of our pipeline of projects or toservice our debt obligations incurred for the purposes of financing the development of such projectsmay be significantly and adversely affected. If any of these events occur, our business, prospects,profitability, financial condition and results of operations may be materially and adversely affected.4. Our only development and operational experience is with the NJHPS, and we have no otheroperating history from which investors may evaluate our business.Except for the NJHPS, we currently have no other power projects in operation and we have no othersignificant operating history from which you can evaluate our business, future prospects and viabilityof the hydroelectric power projects which we have elected to undertake. There can be no assurance thatwe will be able to effectively develop and operate other hydroelectric power projects which are in ourexisting pipeline and our rights to develop and operate such projects may be revoked by the applicableauthorities as a result of such failure. If this occurs, our business, prospects, profitability, financialcondition and results of operation may be materially and adversely affected.5. The Government has historically provided financial support for the development of the NJHPS,which may not be forthcoming in the future.Historically, the Government has provided up to 75% of the equity funding for the NJHPS, in additionto a direct pass-through fixed-rate loan of Rs. 15,379.0 million, using proceeds of a loan obtained fromthe World Bank for that purpose. With effect from April 1, 2004, the CERC framed tariff regulationswhich imposed a maximum threshold of 30% for equity funding of a power project. While theGovernment provided us with financial support for the construction of the NJHPS, the Government didnot provide us with financial support for the Rampur Project, the Government equity portion of whichwe have funded through our internal resources. There can be no assurance that the Government willprovide us with any further equity funding, or that we will be able to generate adequate funds for thecompletion of all our current and planned future projects without the assistance and support of theGovernment.6. We may be in breach of certain of our obligations with respect to the Luhri Project.Under the terms of the agreement awarding us the rights to develop, own and operate the Luhri Project,we are required to establish a special purpose vehicle to develop, own and operate the Luhri Projectwithin six months of the date of the agreement, or by March 26, 2009. A further requirement is for theequity in this special purpose vehicle to be held by our Company and the state government of HimachalPradesh in the proportions 51:49.We have not established the special purpose vehicle relating to the Luhri Project as at the date of thisRed Herring Prospectus, due to commercial and administrative reasons. We have not applied for thewaiver by the state government of Himachal Pradesh of our breach of this requirement. In addition, as aresult of the conclusion of the Offer, we will not be able to comply with the provisions of theagreement for the Luhri Project requiring equity in the project company to be held in the proportions51:49.There can be no assurance that we will be able to obtain the consent of the state government ofHimachal Pradesh to the waiver of these requirements, and if this occurs, our rights to develop, ownand operate the Luhri Project may be revoked or rescinded. If this occurs, our business, prospects,profitability, financial condition and result of operations may be materially and adversely affected.xv

7. With effect from January 2011, we may be required to sell electricity generated at our new projectsthrough competitive tender processes conducted by distribution licensees for long term procurementof power.Under the tariff policy prepared by the Government in 2006 (the “Tariff Policy”), which was broughtinto effect from January 2006, distribution licensees are required to procure their future energyrequirements through competitive bidding processes. This requirement was waived in the case of newprojects developed and commissioned by state-controlled or state-owned enterprises for a period of fiveyears up to January 2011, or where the appropriate electricity regulatory commission was satisfied thatsuch competitive bidding should be introduced for central and state public sector undertakings.In the event that the exemption for new projects being developed and commissioned by central andstate public sector undertakings is not extended, we will be required to participate in competitivebidding processes for the sale of energy generated by projects which have been newly developed andcommissioned by us, against private developers and other public sector undertakings. There can be noassurance that we will be able to bid competitively against such competitors, or that we will besuccessful in winning the competitive bid and selling our power to distribution licensees through longterm for such power purchase agreements. If this occurs, our business, prospects, profitability, financialcondition and results of operation may be materially and adversely affected.8. Our sales of electricity are regulated by directives issued by the Government and are subject toprevailing tariff policies and regulations, which are subject to change, and the switch to the currentperformance based tariff regime may adversely affect us.We are required to charge our customers at a tariff rate determined by the CERC for sales of electricity,which is also set forth in the PPAs between our Company and such customers. In January 2009, theCERC issued the tariff regulation applicable to our Company by way of notification no. L-7/145(160)/2008-CERC for the period between April 1, 2009 and March 31, 2014.Under the new tariff regime, tariffs for the sale of electricity will be determined by reference to annualfixed charges, which are comprised of energy charges and capacity charges. Changes to how capacitycharges are calculated may have a negative impact on the amount we recover as capacity charges.Under the previous tariff regime which applied between April 1, 2004 to March 31, 2009, capacitycharges were determined as being equivalent to annual fixed charges less a primary energy charge,which was equivalent to the product of saleable primary energy (in MU) multiplied by the primeenergy rate. To recover the full capacity charge, a power generating station was required to achieve apredetermined normative capacity index. Where the power generating station was unable to meet thetargeted level, capacity charges would be recoverable on a pro rata basis. Under the new tariff regime,capacity charges for a hydroelectric power station will comprise 50% of annual fixed charges and willbe calculated using a formula that takes into account the actual plant availability factor achieved, ascompared to a prescribed project-specific annual plant availability factor.Accordingly, under the current tariff regime, actual operation of the power generation facility isrequired to recover capacity charges, whereas under the previous tariff regime, recovery of capacitycharges was based on available capacity rather than actual plant availability. This means that while wewere previously able to recover capacity charges based on our available capacity, our ability to recoversuch charges will now depend on our actual production of electricity, which is in turn dependent oncertain factors which may not be within our control, such as sedimentation, rainfall levels andavailability of water supply. The switch to a performance-based tariff regime may have an adverseimpact on our revenues, profitability, financial condition and results of operation should we not be ableto achieve the predetermined annual plant availability factor for any reason.In addition, electricity tariff regulations and policies are subject to revision and further changes by theCERC during the term of the respective PPAs. Any adverse changes in tariff regulations and policies ortheir interpretation by the CERC or Appellate Tribunal for Electricity may limit our ability to recoverpayments due to us or the tariff we are allowed to impose on our customers for sales of electricityproduced by us, thereby adversely affecting our revenues, cash flows, profitability, financial conditionand results of operations. See section titled “Regulations and Policies in India” on page 87.9. Our sole operational project is located, and a significant proportion of our expected generationcapacity will be located, in the state of Himachal Pradesh and we are therefore vulnerable todevelopments or events occurring therein.xvi

Our sole operational hydroelectric power project, the NJHPS and three of our pipeline projects arelocated in the state of Himachal Pradesh. Together with our current generation capacity of 1,500 MWunder the NJHPS, we expect our aggregate generation capacity located in the state of HimachalPradesh to account for approximately 53.3% of our total generation capacity, assuming thecommissioning of all our existing pipeline projects.Due to the actual and expected concentration of our power generation capacity in the state of HimachalPradesh, any disruptions in the state of Himachal Pradesh, including disruptions due to seasonalweather conditions, political and social unrest and regional economic and labour conditions, or changesto the regulatory environment within Himachal Pradesh, would have a disproportionate effect on ourbusiness. Similarly, any environmental, seasonal or other factors which affect the Sutlej River and itstributaries, including excessive rainfall and silt would result in a disproportionate effect on our businessand operations.In addition, we are dependent on the continued good relations between our Company and stategovernmental authorities within the state of Himachal Pradesh to facilitate the timely and effectivedevelopment of our pipeline projects allotted to us by the state government of Himachal Pradesh andfor our ongoing business development and operations. In the event that the state government ofHimachal Pradesh decides to withdraw its support of us, our business, prospects, financial conditionand results of operation may be materially and adversely affected.10. Our audit reports for the previous financial years ended March 31, 2005, 2006, 2007 and 2008 weresubject to qualifications.Our audited financial statements in previous years, which were audited by other auditors, were subjectto qualifications which were cited in the relevant reports. These qualifications were reviewed by thecurrent auditors of our Company in connection with their restatement of our financial statements for therelevant years. Qualifications/comments of Auditors for the five financial years – 2005, 2006, 2007,2008 and 2009 ended March 31 as well as the nine months ended December 31, 2009 are set forth inthe table below:Sr. FinancialNo. Year ended1. 31.03.200931.03.200831.03.2007Auditors’ Comments / QualificationsDetermination of final value of fixed assets in cases where final settlementof bills with the contractors is pending/under dispute. The impact ofadjustments is not ascertainable.2. 31.03.2007 Provisional insurance claim of Rs.912.9 million against expenditure onrestoration activity and adjustment of on account payment of Rs.500.0million received from the Insurance Company and allocation thereofbetween Prior Period and current year Generation and AdministrationExpenses3. 31.03.2006 i).Company has lodged a claim of Rs.941.0 million with Insurance Companyfor loss of machinery and restoration cost etc. On account payment ofRs.500.0 million received from Insurance Company has been shown asliability in absence of item wise details of settlement of claimii).Company has also filed a claim for loss of profit amounting toRs.3207.860 .million which is yet to be accepted/admitted.4. 31.03.200631.03.2005The value of fixed assets and depreciation are subject to adjustment on finaldetermination/recovery/Levy of LD in accordance with Contract Agreementfor works for project construction.5. 31.03.2005 Total Project cost exceeded the approved revised cost (RCE-II) of theproject Rs.76,663.1 million as at June, 1998 price level with commissioningschedule of March, 2002. Revised cost estimate (RCEIII) is reported to beunder approval by the Government.6. 31.03.2005 The land is capitalized on provisional basis pending determination of finalland value and consequential adjustment thereof. Further, part of the landacquired and the Title Deeds of the buildings are yet to betransferred/mutated/recorded in the name of the Company7. 31.03.2005 Provision has not been made for Assets declared surplus / obsolete valuingRs.9.2 million as on the Balance Sheet date.Besides, scrap has been accounted for on realization basis.Impact on restated financialsAs the final settlement amountcannot be determined, noadjustments have been made in therestated financial statements.As the insurance claim has beensettled in F.Y. 2007-08, theadjustment of the amount receivedhas been appropriately made in theyear the expenditure on restorationof damages had been incurred.As the insurance claim has beensettled in F.Y. 2007-08, theadjustment of the amount receivedhas been appropriately made in theyear the expenditure on restorationof damages had been incurred.As and when, the contracts arefinally closed, the amount of LD isdetermined and the adjustment ismade in the accounts through priorperiod items. All such prior perioditems have been adjusted inrespective years.Confirmatory statement and henceno restatement is requiredCannot be quantified, hence noadjustments have been made in therestated financials.No restatement has been made asthe data regarding scrap value ofsuch assets is not readily available.Value of scrap sold is not materialxvii

8. 31.03.2005 In supply cum erection contracts, values of shipments have been accountedfor on pro-rata basis on number of boxes as material in transit and CWIP onthe balance Sheet date.9. 31.03.2005 The liability, if any, arising on account of delay in deduction of Income Taxat source at the year end remains unadjusted pending final determination.10. 31.03.2005 Loans and Advances include Rs.29.5 million recoverable on account ofproportionate cost of inter connection facility at Jhakri Pot head Yard whichwill be shared by Baspa-II HE Project (M/s. Jai Prakash Hydro Power Ltd.)for evacuation of power.11. 31.03.2005 Loans and Advances include Rs.16.1 million towards amount recovered byIncome Tax Department towards TDS on deposit made with High Court HP,Shimla for contesting the case of enhancement of compensation for landincluding interest. The Company is contesting the recovery with ITAT andHigh Court of HP, Shimla. The Company deducted TDS on subsequentdeposits during the year, deposited the same with Income Tax Departmentand issued TDS Certificates in the name of joint claimants instead ofindividuals as required by the Income Tax Act, 1961.12. 31.03.2005 Sundry debtors include Rs.184.0 million on account of unrealised debtorstowards sale of 12% free power belonging to Government of HimachalPradesh. Due to pendency of mutual formal agreement and commercialterms for sale of free power on their behalf, an amount of Rs.115.9 millionrealized has not been paid to them as at the year end.13. 31.03.2005 Advances for Capital works and Loans and Advances include Rs.276.4million towards EOT claim and Rs.961.3 million towards others fromcontractors are on account of contractual disputes and is subject toconsequential adjustment on settlement of disputes.14. 31.03.200931.03.200831.03.200731.03.200631.03.2005Although the Company has an Internal Audit department and also some ofthe areas got audited by a firm of Chartered Accountants, scope of workcovered, reporting system, compliance thereof need to be furtherstrengthened. Subject to above the existing internal audit system iscommensurate with its size and nature of its business.15. 31.03.2009 Undisputed statutory dues including Provident Fund, etc. have beengenerally deposited by the Company in time with appropriate authoritiesexcept in the cases of:i) petty contractors’ labour where P.F. Code has not been assigned by theappropriate authorities, andii) R&D Cess tax liability of Rs.9.6 million.16. 31.03.2009 There are disputed amounts of:i) Rs.0.1 million payable in respect of excise duty (dispute pending atCESTAT), andii) Rs. 123.6 million in respect of Service Tax (dispute pending withCommissioner, Excise & Service Tax, Chandigarh)17. 31.03.200831.03.200731.03.200631.03.2005The Company is regular is depositing undisputed statutory dues includingProvident Fund etc. with appropriate authorities except in the cases of pettycontractors’ labour where P.F. Code has not been assigned by theappropriate authorities.There is a disputed amount of Rs. 0.1 million payable in respect of exciseduty payable to Department of Excise & Customs.to effect restatement.Values fully ascertainedsubsequently and necessaryaccounting adjustments made.As the amount cannot bedetermined, no adjustment has beenmade in the restated financialstatements.Amount recovered subsequently andnecessary accounting adjustmentsmade. No restatement required.As the amount cannot bedetermined, no adjustment has beenmade in the restated financialstatements.Amounts adjusted subsequently andnecessary accounting adjustmentsmade. No restatement required.As and when, the disputes aresettled, the amount of claims isdetermined and the adjustment ismade in the accounts through priorperiod items. All such prior perioditems have been adjusted inrespective years.Strengthening of the internal auditsystem is a continuous process. Thisis only a statement required underCARO and does not need anyrestatement.Now SJVN has got sub-code issuedand compliance is being madethrough sub-code in respect of thesecontractors.Matter pending settlement. Henceno restatement required.Since these matters are underdispute, provision / payment will bemade on settlement. No restatementrequired.Now SJVN has got sub-code issuedand compliance is being madethrough sub-code in respect of thesecontractors.As the matter is under dispute,provision / payment will be made onsettlement. Hence, No restatementrequired.18. Nine monthsended31.12.200919. Nine monthsended31.12.2009Sales have been accounted for provisionally at the tariff approved by CERCas applicable on 31.03.2009, instead of as per the new norms notified byCERC applicable with effect from. 01.04.2009, resulting in understatementof profit for nine months by Rs.413.4 Million.Sale/Lease Deeds in respect of Land & Buildings valuing Rs.23.5 Millionare yet to be executed in favour of the company.No restatement has been made asthe sales have been accounted for asper the Accounting Policy No. 11.1of the company. The difference willbe accounted for after the finaldetermination of tariff by the CERCas per the new norms.Factual statement and hence norestatement is required.11. We have significant contingent liabilities, and have made no provision for such liabilities in ourfinancial statements.We have not made provision for certain contingent liabilities. Details of such contingent liabilities areset forth below:xviii

(Rs. in million)For the nine monthsParticularsended December 31,20091. Claims against company not acknowledged as Debt:a) Capital Works 5,429.7b) Land Compensation 144.9c) Disputed Service Tax123.6Demandd) Others 2.0Sub Total 5,700.22. Estimate amount of contracts remaining to be executed on 10,941.8capital account (net of adv.) not provided for:Total 16,642.012. Recent announcements by the Government relating to increased wages for government employeeswill increase our expenses.In November 2008 and April 2009, the Government issued two memoranda, pursuant to which it wasproposed to increase the pay scales applicable to board members and executive officers of governmententerprises, including our Company. These memoranda also required government enterprises toimplement salary increases for employees below the executive level, as determined by the boards andmanagement of the relevant government enterprises. Salary increases for all eligible governmentemployees were stated to be retrospectively effective from January 2007. It was further stated that theserevisions would be made by way of a presidential directive for each central public sector undertakingseparately by the relevant administrative department or ministry. We may therefore be required toincrease the pay of our employees retrospectively upon the issuance of such a presidential directive.As of December 31, 2009, we have made total provisions of Rs. 682.9 million for these retrospectivepayments, based on estimates made in compliance with the memoranda issued by the Governmen13. Significantly all of our revenue is derived from sales of power to state electricity boards anddistribution licensees.For the year ended March 31, 2009 and the nine month period ended December 31, 2009,approximately 91.19% and 94.25% respectively of our total revenues were attributable to our sales ofelectricity to state electricity boards and distribution licensees pursuant to long term power purchaseagreements entered into between us and such state electricity boards. We are obliged to supply powerto these state electricity boards and distribution licensees pursuant to the terms of the allocation lettersissued by the Government and the terms of our PPAs with them. In addition, we are required to provideapproximately 12% of our annual generation to the state of Himachal Pradesh free-of-cost, and anadditional 1% of generation from our operational projects located in the state of Himachal Pradesh to astate-established local development fund.Under the terms of our PPAs and the allocation letters issued by the Government, we commit part ofour annual electricity production to each applicable state electricity board or distribution licensee attariff rates determined by the CERC in accordance with their guidelines. We are not entitled to sellenergy generated by the NJHPS in the open market or based on open market energy prices underprevailing Government policies. As such, we are limited in our ability to benefit from increases inenergy market prices.Pursuant to the terms of our PPAs, our invoices for power supplied to our customers are currentlysecured through letters of credit. There can be no assurance that these state electricity boards ordistribution licensees will always be required to, or be in a position to, secure their payments to us. Inthe event that we experience any defaults or delays in payments for electricity supplied by us to theseparties, our profitability, cash flows, financial condition and results of operations may be materially andadversely affected.14. We may be required to allocate an additional one percent of the power generated by the NJHPS to alocal development fund established by the state government of Himachal Pradesh.Based on a cabinet decision of the state government of Himachal Pradesh (as published in Press NoteNo.884/2009-PUB), with effect from September 9, 2009, we are required to provide one percent of theaggregate energy generated by our operational power projects located in the state of Himachal Pradeshxix

to a local area development fund which has been established by the state government of HimachalPradesh for the purposes of providing a regular stream of revenue for income generation and welfareschemes, creation of additional infrastructure and common facilities. This is in addition to the 12% freepower already being provided.As of the date of this Red Herring Prospectus, our only operational project in the state of HimachalPradesh is the NJHPS. We are currently not providing the required one percent of energy generated bythe NJHPS to the local area development fund and may be required to do so once the decision of thecabinet is communicated to us. There can be no assurance that we will be able to obtain the waiver bythe state government of Himachal Pradesh with respect to our obligations associated with the NJHPSunder the cabinet decision to the local area development fund and in the event that we are unable toobtain such waiver, we may be required to meet our obligations to provide such energy withretrospective effect from the date of the cabinet decision or as directed by the state government ofHimachal Pradesh, which will adversely affect our revenues, profitability, financial condition andresults of operations.15. Our current business strategy involves, among others, the diversification of our operations intovarious alternative energy projects, such as wind power and solar energy, in which we have no prioroperational history.Our current business strategy requires, among other things, the diversification of our businessoperations into various alternative energy projects, such as wind power and solar energy projects. Weare currently in the process of evaluating the feasibility of such alternative energy projects, and haveobtained board approval to engage professional consultancies with the appropriate technical knowhowand expertise, to identify any suitable business opportunities in these alternative energy sectors. Wehave also agreed to participate in a joint venture involving the construction and operation of part of apower transmission line connecting Nepal and India. We anticipate that we would be dependent onthird party contractors and consultants in the initial stages of such diversification until we haveinternally developed the specialized technical knowledge, skills and expertise required. We currentlyhave no prior experience in designing, constructing or operating such alternative energy projects or inthe development or operation of transmission lines, and there can be no assurance that we will be ableto successfully leverage our operational expertise with hydroelectric power projects in these sectors, orthat we will be successful in identifying or tendering for alternative energy projects or other energyrelatedprojects given our lack of prior experience in the respective fields.16. We may be restricted from engaging in certain business activities or undertaking certain corporateor other actions under the terms and conditions governing our indebtedness to the World Bank andother financial institutions, and future financings may place restrictions on our operations.There are restrictive covenants in the agreements we have entered into with the World Bank and withcertain banks and financial institutions for our borrowings. These covenants typically require us toinform lenders prior to undertaking certain corporate actions such as new share issuances, incurrencesof additional debt, creation of additional encumbrances on our assets and making corporate guarantees,and restricts, among other things, our ability to incur or guarantee additional indebtedness and issuestock, create or incur certain liens, make certain payments such as dividend payments or otherdistributions, prepay or redeem subordinated debt or equity, make certain investments and capitalexpenditures, create encumbrances or restrictions on the payment of dividends or other distributions,loans or advances to and on the transfer of assets, sell, lease or transfer certain assets, engage in certaintransactions with affiliates and consolidate or merge with other entities, subject to certain exceptionsand qualifications as set forth in the relevant documentation. These covenants could limit our ability tofinance our future operations, project developments and capital needs and our ability to pursue newprojects or other business opportunities and activities which may be in our interest. For further details,see section titled “Financial Indebtedness” on page 123.Certain of our financing agreements also contain financial covenants that require us to maintain, amongother things, a specified debt to equity ratio and an asset coverage ratio. Further, our loan agreementswith the Life Insurance Corporation of India and the Rural Electrification Corporation Limited providethat, in the event that such lender is of the view that the business of our Company is conducted in amanner contrary to public policy or in a manner prejudicial to such lender’s interest, the relevant lendershall have the right to require our Company to restructure our organizational structure, includingthrough formation of management committees with such powers and functions that are consideredsuitable by such lender.xx

There can be no assurance that our business will generate sufficient cash to enable us to service ourdebt, comply with our covenants or to fund our other liquidity needs and capital expenditurerequirements, or that we will be able to refinance our debt on commercially reasonable terms or at all.We also expect to raise additional debt financing in order to develop our pipeline of existing projects,as well as future new projects. The terms of these financings may place significant restrictions on usand may, among other things, increase our vulnerability to general adverse economic and industryconditions, limit our ability to pursue our growth plans, require us to dedicate a substantial portion ofour cash flow from operations to payments on our debt, thereby reducing the availability of our cashflows to fund capital expenditures and other general corporate purposes or limit our flexibility inplanning for or reacting to changes in our business and industry, either through the imposition ofrestrictive financial or operational covenants or otherwise.17. We are exposed to interest and exchange rate fluctuations.All of our revenues are denominated in Rupees while a significant portion of our outstanding debtobligations are or are expected to be denominated in foreign currencies such as the U.S. dollar. As ofDecember 31, 2009, approximately 34.8% of our aggregate indebtedness is denominated in foreigncurrencies. We also expect to incur substantial indebtedness denominated in foreign currencies in orderto finance the development of our existing pipeline of projects. In addition, all our unsecuredborrowings are denominated in foreign currencies. Accordingly, any depreciation of the Rupee againstthe U.S. dollar or other foreign currencies in which our future indebtedness may be denominated, willsignificantly increase our funding costs. If we are unable to recover the cost of foreign exchangevariations through our tariff pricing or through undertaking hedging activities, our profitability,financial condition and results of operations may be materially and adversely affected.18. Certain of our hydroelectric power projects are cascading projects.Three of our hydropower projects in the state of Himachal Pradesh, including the NJHPS, the RampurProject and one other pipeline project, are located on the main Sutlej river or its tributaries and areexpected to have an aggregate generation capacity of up to approximately 2,687 MW. The NJHPS andthe Rampur Project are cascading projects, and the Rampur Project is dependent on the NJHPS for itssupply of water. Consequently, if operations at the NJHPS are disrupted, concurrent disruptions mayresult at the Rampur Project.19. We have certain outstanding tax obligations.In October 2008, the Commissioner of Central Excise, Chandigarh, issued a show cause notice (No.V(STC) 15/CE/ADJ/69/2008/8245) for service taxes payable of approximately Rs. 133.3 million,including interest and penalty charges. The show cause notice alleges failure to deposit service tax onpayments made in convertible foreign exchange to foreign consultants, contractors and experts locatedoutside India. In January 2009, we responded to the notice, admitting a service tax liability of Rs. 9.7million and paid such amount to the relevant authorities. The outstanding amount of Rs. 123.6 millionis currently being disputed by our Company, and the matter is currently pending before the taxauthorities.20. We are dependent on the Government for the acquisition of land for our projects.The Land Acquisition Act, 1894 sets forth provisions for the compulsory acquisition of land by thegovernment for any “public purpose” or for use by a corporate body. The term “public purpose” hasbeen defined to include town or rural planning, planned development of land from public fundspursuant to any government scheme or policy and development schemes sponsored by the government,including acquisitions for a corporation owned or controlled by the State. For a corporate body which isnot owned or controlled by the State, prior permission from the appropriate government is required,along with an executed agreement with the appropriate government. Any person having an interest insuch compulsorily acquired land has the right to object and the right to fair and just compensation. Thevalue of compensation for the property acquired depends on several factors, which, among other things,include the market value of the land and damage sustained by the person in terms of loss of profits.We are not involved at any stage of the land acquisition process and accordingly, have no control overthe price to be paid for the acquisition of such land or negotiations with landowners. There can be noassurance that the statutory land acquisition process will not result in our having to pay a price higherthan the estimated price for acquiring land. In addition, we may be exposed to litigation with respect toxxi

land acquired for our Company through the statutory land acquisition process. For further details, seesection titled “—Internal Risk Factors— Risks Relating to our Business— We may be subject tofuture litigation, including public interest litigation, instituted in connection with the environmentalimpact of our projects or in connection with land acquisition activities carried out with respect tosuch projects” on page xiv.There can be no assurance that the Government will be able to successfully acquire the land requiredfor the construction of our hydroelectric power projects in a timely manner, at a reasonable price, or atall. Any delays in the land acquisition process, including delays due to the unwillingness of landownersto sell their land or opposition from affected communities or public interest groups, may result inconstruction delays for a hydroelectric project, which may in turn result in increased project costs anddelay in the commencement of commercial operations of that project. In addition, certain landownersmay dispute the adequacy of compensation which has been determined by the relevant authorities, andmay pursue legal action against our Company. We may also face claims by persons who have beendisplaced by the land acquisition process. For further details see “—Internal Risk Factors—RisksRelating to Our Business—We are presently involved in certain litigation proceedings and otherlegal, regulatory and arbitration proceedings” on page xiii. If this occurs, the land acquisition processmay be delayed, which would in turn delay the development of the affected project, and our business,prospects, profitability, financial condition and results of operations may be materially and adverselyaffected as a consequence.In addition, we have been awarded rights to develop and operate the Arun-III Project, a hydroelectricpower project to be located in the Sankhuwasabha district in Nepal. Going forward, we intend toleverage on our technical expertise in developing and operating hydroelectric power projects to obtainnew projects within India as well as in surrounding regions and in Asia, and we will be exposed to risksassociated with the land acquisition process in the countries in which we operate.21. Some projects which may have originally been awarded to us, may be transferred to other of ourcompetitors by the Government or state governments.There have been instances in the past where state governments, or the Government, has decided totransfer rights to construct and operate hydroelectric power projects which were originally awarded tocertain parties, to other competing power developers. For example, in July 2009, the Government,through the Ministry of Power, pursuant to its minutes of meeting dated July 6, 2009, decided totransfer the 1500 MW hydroelectric power project to be located in the state of Manipur on the Barakriver, or the Tipaimukh Project, from the original developer to a joint venture company to beestablished by NHPC Limited, the state of Manipur, and our Company. In addition, in October 2009,the state government of Himachal Pradesh notified our Company that it would be transferring the rightsto construct and operate the 1,020 MW hydroelectric power plant to be located in Khab to theHimachal Pradesh Power Corporation. We were originally awarded the rights to construct and operatethis hydroelectric power project pursuant to a letter dated December 16, 2004 issued by the PrincipalSecretary (Power) to the state government of Himachal Pradesh (Reference Number.(2)8/2001/III/Shimla-2). We have sought the reconsideration of this decision by the state governmentof Himachal Pradesh in relation to this transfer and at the date of this Red Herring Prospectus, noresponse has been received by our Company from the state government of Himachal Pradesh.There can be no assurance that projects which have been awarded to us will not be transferred to otherof our competitors pursuant to Government or state government decisions in the future. If this occurs,our business and prospects may be materially and adversely affected.22. We may not be able to fulfill certain of our obligations with respect to the Dhaulasidh Project in thefuture.Under the terms of the Memorandum of Understanding dated October 27, 2008 entered into by ourCompany with the state government of Himachal Pradesh for the purpose of developing andmaintaining the Dhaulasidh Project, the equity funds for the Dhaulasidh Project will be contributed inthe ratio of 51:49 by the Government (through our Company) and the state government of HimachalPradesh (through our Company and individually) respectively. To achieve the same, funding will beprovided by our Company from internal cash flows and the difference will be funded by the stategovernment of Himachal Pradesh through equity subscriptions, so as to bring its overall equitycontribution in the Dhaulasidh Project up to 49%.xxii

There can be no assurance that the equity contribution in the aforesaid ratio will be made by theGovernment and the state government of Himachal Pradesh. If this occurs, our rights to develop, ownand operate the Dhaulasidh Project may be revoked or rescinded and our business, prospects,profitability, financial condition and result of operations may be materially and adversely affected.23. We may not be able to continue to meet the annual performance targets set by the Government.At the beginning of each financial year, we agree certain performance targets relating to our operationsand financial performance with the Government, the terms of which are set out in memoranda ofunderstanding executed between the Government and our Company. There can be no assurance that wewill continue to meet these performance targets, and as a consequence of such failure, may lose ourstatus as a Mini-Ratna public sector company. This would result in our loss of powers delegated to usby virtue of being classified as a Mini-Ratna public sector company.In addition, payment of performance-related pay to our management and employees is conditionedupon our fulfilment of certain performance targets. In the event that we do not meet our minimumperformance targets, such performance-related pay will not be paid to our employees, and we may facedifficulties in retaining and attracting employees for our operations in the future.24. We may be liable for damages under an indemnity agreement with the Power Grid Corporation ofIndia in the event that we experience delays in the construction of our projects.Pursuant to the terms of an indemnity agreement entered into by our Company and the Power GridCorporation of India (“PGCIL”), we may be liable to pay certain damages in the event that there aredelays in the construction of our projects and the transmission lines constructed by the PGCIL arecommissioned on schedule. Similarly, the PGCIL would be liable to pay certain damages in the eventthat our projects are completed on schedule and there are delays in the construction of transmissionlines by the PGCIL for the evacuation of power from such operational projects. If we are found liablefor such damages, or if there are delays in the construction of transmission lines to our projects whichwould result in our not being able to evacuate generated energy into the grid, our profitability, financialcondition and results of operation may be materially and adversely affected.25. We may not be able to obtain or maintain all approvals and licenses required for the operation ofour business or the construction of our projects.We require certain approvals, licenses, registrations and permissions from time to time for operatingour business. In particular, we are required to obtain certain approvals and licenses at each stage ofdevelopment of our projectsSr.No.Project Approval Approving/LicensingAuthority1. NaitwarMori HydroElectricProjectEnvironmental ClearanceUttarakhandEnvironmentProtection andPollution ControlBoard (the“UPCB”)2. CAT Plan Office ChiefWildlife Warden(the “CWLW”)DescriptionBy way of letter dated February 11, 2009(“Letter”), the Company submitted the EIA/ EMPreport and other documents to UPCB .In theLetter, the Company requested UPCB to conduct apublic hearing for grant of environment clearance.1. CAT Plan of the catchment area wassubmitted to Director, Rajaji NationalPark, Dehradun by Deputy Director ,Govind Wild Life Sanctuary, NationalPark Purola, Uttarkashi on November20, 2009;2. The CAT Plan was further submitted toChief Forest Conservator (Wild Life)/CWLW by Director, Rajaji NationalPark, Dehradun on December 26, 2009for necessary action; and.3. The CAT Plan was further submittedby CWLW on December 31, 2009 toChief Forest Conservator, Uttarakhandfor his approval which is presentlypending.xxiii

Sr.No.Project Approval Approving/LicensingAuthority3. Land AcquisitionDescription(i)Diversion of ForestLand1. Forest conservator (Yamuna circle),Uttarakhand, submitted the case filespertaining to grant of lease of forestland admeasuring 32.002 Hectares tothe Company for 30 years, to NodalOfficer-cum-Chief Conservator ofForests on 16.09.09 for takingnecessary action.2. Further by way of letter datedDecember 30, 2009, the Companysubmitted five copies of the fact sheetrelated to aforesaid lease to NodalOfficer-cum-Chief Conservator ofForests.3. Application dated July 21, 2009 madeto the Divisional Forest Officer, TonsForest Department, Purola, Uttarkashi,Uttarakhand, for diversion of forestland admeasuring 7.88 Hectares andsituated in Banol, Nasna and BhaslaBlocks of River Tons, for miningpurposes.4. Approval for Magazine Licenseunder Explosive Rules 19835. JhakolSankriHydroElectricProjectChief Controllerof Explosive,Petroleum andExplosive SafetyOrganisation(“ChiefController”).Application dated February 1, 2010 bearingreference no. SJVN/GM/D.dun/10-719 has beenmade by the Company to the Chief Controller forgrant of explosive license for installation ofpermanent explosive magazine at Jakhyani.CEA clearance of DPR CEA The DPR is under preparation.6. Explosive license Chief Controllerof Explosive,Petroleum andExplosive SafetyOrganisation7. Diversion of forest land Divisional ForestOfficer (“DFO”)Identification of land is under process. We areproposing to make the application to Controller ofExplosives/Licenses once the land is identified.Identification of land required for the Project isunder process. We are proposing to make theapplication to concerned DFO after the land isidentified.8. Pre Environmental Clearance MoEF Application dated October 16, 2007 bearingreference no. SJVN/ BD&MS/ Uttarakhand/JSHEP/2007/ has been made by the Company tothe Additional Director, MoEF for grant of preenvironment clearance which is presently pending.9. Wildlife clearance Department ofForests, GoUApplication dated November 10, 2008, bearingreference no. SJVN/BD&L/DDUN/JSHEP (WL)08- 200-05 has been made by the Company to theChief Conservator of Forests and Chief WildlifeWarden, GoU for grant of wildlife clearancewhich is presently pending.xxiv

Sr.No.Project Approval Approving/LicensingAuthority10. Consent to Establish and Consent toOperate under Water (Preventionand Control of Pollution) Act 1974and the Air (Prevention and Controlof Pollution) Act 1981 andHazardous Wastes ManagementRulesMoEFDescriptionWe are proposing to make the application after thegrant of environment clearance.11. DevsariHydroElectricProjectCEA clearance of DPR CEA DPR was submitted to CEA for clearance byway of letter dated January 14, 2009 bearingreference no. CC/CP/UKD/2008-2706, and thesame is pending clearance.12. Environment and PollutionClearanceUttarakhandEnvironmentProtection andPollution ControlBoard, Dehradun(“UPCB”)By way of letter dated August 31, 2009, bearingreference no. SJVN/DHEP/DGM/09-1725(“Letter”), the Company submitted the draftEIA/ EMP reports to UPCB. In the Letter, theCompany requested UPCB to conduct a publichearing in order to enable the Company tosubmit the final EIA/ EMP report to MoEF forgrant of environment clearance.13. Diversion of forest land Divisional ForestOfficer,Badrinath ForestDivision,Gopeshwar(“DFO”)14. Mining clearance from State MiningDepartmentState MiningDepartment,GoHPApplication dated August 31, 2009 bearingreference no. DGM/DHIP-1802A, was made toDFO, Badrinath Forest Division, Gopeshwar, fordiversion of forest land admeasuring 211.58Hectares.The quarries have been identified. The samplesfrom proposed quarries have been delivered toCentral Soil and Material Research Station,Ministry of Water Resources, GoI (“CSMRS”) onJune 12, 2009. The final report from CSMRS isawaited. The application for mining clearancesshall be processed after receipt of final report.15. Consent to Establish and Consent toOperate under Water (Preventionand Control of Pollution) Act 1974and the Air (Prevention and Controlof Pollution) Act 1981 andHazardous Wastes ManagementRulesMoEFWe are proposing to file the applications for grantof consent to establish and consent to operate.16. LuhriHydroElectricProjectSubmission of DPR for TEC/concurrence of CEA.CEADPR has been submitted to the CEA on November10 2008, for TEC and is under process.xxv

Sr.No.17.Project Approval Approving/LicensingAuthority(i)Diversion of ForestLandDivisional Forestofficer (“DFO”)Description1. Application dated January 30, 2008 bearing no.LHEP/R&R/LAD/L-9/08-6676-84 has been madeto the DFO, Shimla, District Shimla for diversionof 33.4 Hectares of land;2. Application dated January 29, 2008 bearing no.LHEP/R&R/LAD/L-9/08-6638-46 has been madeto the DFO, Anni, At Luhri, District Kullu,Himachal Pradesh for diversion of 42.36 Hectaresof land;3. Application dated January 29, 2008 bearing no.LHEP/R&R/LAD/L-9/08-6648-56 has been madeto the DFO, Rampur, District Shimla, HimachalPradesh for diversion of 33.95 Hectares of land;4. Application dated January 30, 2008 bearing no.LHEP/R&R/LAD/L-9/08-6658-66 has been madeto the DFO, Karsog, District Mandi, HimachalPradesh for diversion of 65.64 Hectares of land.5. Application dated January 30, 2008 bearing no.LHEP/R&R/LAD/L-9/08-6667-75 has been madeto the DFO, Kotgarh, District Shimla, HimachalPradesh for diversion of 7.86 Hectares of land.18. DhaulasidhHydroElectricProjectSubmission of FSR. Department ofMPP and Power,GoHP19. Diversion of Forest Land Divisional ForestOfficer,Palampur,District Kangra(H.P.)(“DivisionalForest Officer”)20. Registration under the CLRA Labour Officer,Bilaspur, DistrictBilaspur,Himachal PradeshFSR was submitted to GoHP on August 31, 2009.Application dated January 22, 2010 bearing no.SJ/DSHEP/SM/Const./2010/21-23, has been madeto the Divisional Forest Officer for deputation oftheir representatives to assist the Company incounting the trees and the completion of otherformalities for diversion of forest land.Application dated January 1, 2010 bearing no.DSHEP/P&A/2010-540/1 made to Labour Officerfor registration under CLRA.Government and state approvals and licenses are typically subject to numerous conditions, some ofwhich are onerous and require us to make substantial expenditures. There can be no assurance that wewill be able to obtain these approvals on a timely basis or at all, or that such approvals will not begranted subject to certain conditions or restrictions which may require us to incur significant costs ofcompliance. In addition, if we fail to comply with any of the conditions of any such licenses orapprovals, or if the relevant regulatory authorities claim we have not complied with such conditions,our licenses or approvals may be suspended, revoked or terminated, penalties may be imposed or wemay be required to undertake remedial action or to suspend our operations until such time asinvestigations or remedial action is completed. If this occurs, our business, prospects, financialcondition and results of operation may be materially and adversely affected.26. We have not obtained approval for the recovery of certain project costs incurred in the developmentof the NJHPS.We are required to obtain approval of project cost estimates for the construction of a hydroelectricpower project from the relevant state government (in the case of hydroelectric power projects withestimated project costs of up to Rs. 5,000 million) and from the CEA (in the case of hydroelectricpower projects with estimated project costs which exceed Rs. 5,000 million). After the project has beencommissioned, certain additional claims may be received for work done during the construction period.For example, with respect to the NJHPS, we have received claims from our major contractors relatingto civil works carried out on the NJHPS of approximately Rs. 6,376.8 million in aggregate, of whichfour awards have been made in favour of such claimants of approximately Rs. 1,393.1 million inaggregate, and provision for such claims has been made in our financial statements. We intend to applyto the PIB for approval of revised project cost estimates and thereafter, to the CERC to recoverxxvi

payments made for these claims as part of annual fixed charges. There can be no assurance that we willbe able to obtain such approval for any application made to recover these costs as part of our annualfixed charges for the NJHPS. In addition, we may not be able to obtain approval for the recovery ofcertain costs, or may be allowed to recover only part of such costs. If we are unable to obtain approvalfor project costs incurred by us, or to obtain such approval in a timely manner, we will not be able topass through such costs through our electricity tariffs and will be required to recognize these costs aslosses on our balance sheet. If this occurs, our profitability, financial condition and results of operationsmay be materially and adversely affected.In addition to this, we may apply for the recovery of certain capital expenditures as annual fixedcharges through our electricity tariffs, on an ongoing basis during the operations of a hydroelectricpower project, such as when we replace plant equipment and machinery due to wear and tear. If we areunable to obtain approval for such costs to be included in the determination of annual fixed charges onwhich our tariffs for electricity sales are based, we will be required to recognize these costs as losses,and our profitability, financial condition and results of operations may be adversely affected as a result.27. The development of hydroelectric power projects may be subject to unexpected complexities anddelays, which may cause the actual timeframes of such project development to differ significantlyfrom original estimates.We typically perform feasibility studies on each project proposal before determining whether we wishto proceed with undertaking the development of a particular hydroelectric power project which hasbeen awarded or proposed to us. These studies generally include certain estimates and assumptions, inparticular, as to estimated project costs and the construction period required. The estimates andassumptions used in our preparation of feasibility studies are based on certain tariff regulationspublished by the CERC. Typically, a preliminary feasibility study is prepared with respect to eachproposed hydroelectric power project setting out, among other things, the proposed construction designand project cost estimates. This is submitted to the CEA or relevant state governments for approval.Upon approval of the feasibility study report, further surveys and investigations are conducted, and adetailed project report is prepared and submitted to the CEA. We are required to obtain the approval ofthe CEA with respect to proposals to develop and operate hydroelectric power projects where theestimated project costs would be in excess of Rs. 5,000 million, and the approval of the relevant stategovernment for hydroelectric power projects with estimated project costs of up to Rs. 5,000 million.We supervise construction work carried out on our hydroelectric power projects, and select subcontractorsfor the purposes of constructing our projects based on a competitive tender process. Therecan be no assurance that bids received from third party contractors will match the project cost estimatesas approved by the CEA and the PIB. If we are unable to obtain approval for the revised amounts to beincluded as annual fixed charges recovered under our electricity tariffs, or experience significant delayin doing so, we will not be able to recover such costs and our profitability, financial condition andresults of operation may be affected as a result.There are a number of factors which are characteristic to the development and construction ofhydroelectric power projects which may cause significant delays or cost overruns:• Opposition from local communities, public interest groups or non-governmental organizations;• Delays in the land acquisition process and associated resettlement and rehabilitation issues;• Geological, hydrological and climatic conditions;• Raw material and labor shortages or increased costs associated therewith;• Delays in obtaining all requisite environmental and other governmental clearances;• Availability of financing;• Remote location of project sites, necessitating the construction of transportation access to suchsites;• Non-viability of a project or modification to the project necessitated due to geological or feasibilityissues;• Natural disasters such as earthquakes, landslides or flooding; and• Damage or injury to third parties.xxvii

We have in the past experienced significant delays in the completion of the NJHPS due to unforeseenvariances in the geological rock formations, which were only discovered during the excavation process.For example, while excavating the site for the head-race tunnel for the NJHPS, a hot water ingress wasencountered, which necessitated special measures to be taken, delaying the completion schedule for theproject. In addition, shear zones containing soft and crushed rock were encountered in several locationson the project site, in particular at the Rattanpur adit, where the shear zone was particularly wide. Theseunforeseeable geological conditions posed unique challenges and necessitated substantial changes inour construction methodology for these sites, as well as in the types of construction equipment andsupport mechanisms used at these sites. This created significant delays while obtaining the constructionequipment required, as well as in the formulation of the construction methodology to be used at thesesites.We have also experienced project delays in the construction of the NJHPS due to weather and climaticconditions. For example, in August 2000, unprecedented rainfall in the upper reaches of the catchmentarea of the Sutlej river resulted in a flash flood, which washed away bridges and a dam constructed inthe project area, as well the camps constructed in the project area, and flooded the undergroundpowerhouse where erection of equipment was at an advanced stage. Based on a report dated November2006 issued by the Ministry of Power on the time and cost overruns relating to the NJHPS, as a resultof this incident, there were time overruns on various project components of between 12 months and44.50 months.Due to the factors above, in particular, the inability to accurately detect geological faults or otherformations which may necessitate modifications to the project design or result in delays to the projectcompletion date or increased project costs, it is not possible to predict with any certainty when, if or towhat extent a project currently under development or a planned future project will be completed. In theevent that we undertake a project which cannot be completed due to unforeseen circumstances beyondour control, our business, prospects, financial condition and results of operations may be materially andadversely affected.28. The development of hydroelectric power projects typically requires substantial initial capitalexpenditures.The development of hydroelectric power projects is capital intensive and typically requires a longerperiod of time as compared to other power projects such as thermal power projects.We expect to finance our existing pipeline of projects through financing arrangements with third partylenders, as well as through internal cash flows. There can be no assurance that we will be able to obtainsuch financing, or to do so on commercially acceptable terms or in a timely manner. In addition, even ifwe are able to obtain financing for our projects, lender financing commitments and drawdown of fundspursuant to such financing are typically subject to the fulfilment of certain conditions precedent.Certain project financing arrangements may also provide for staggered release of funds conditionalupon the completion of specified project stages. In the event that significant project delays or increasesin project costs are experienced, we may not be able to fulfil all or any of such release conditions, inwhich case these lenders would have no obligation to provide further financing to us as agreed in thedocumentation. Such project delays or increases in project cost estimates may also be subject to lenderapproval or may constitute events of default under the financing documentation. We may also need tolook for additional sources of finance, which may not be readily available or available on commerciallyreasonable terms, and may be restricted from obtaining such financing under the terms of our existingindebtedness. Any failure on our part to satisfy our funding release conditions, comply with ourobligations under our financing arrangements or obtain additional financing if required wouldmaterially and adversely affect our business, prospects, financial condition and results of operations.Certain of the agreements governing our existing indebtedness include cross-default provisions. As ofthe date of this Red Herring Prospectus, approximately 14.29% of our debt agreements contain crossdefaultprovisions. In addition, we have not incorporated separate subsidiaries for the development andoperation of our existing pipeline of projects. Consequently, if we were to experience difficulties on aproject which result in our Company being in default of its obligations pursuant to the financingarrangements for that particular project, we may be deemed to be in default under all of our financingarrangements, and may be declared to be insolvent as a result. If this occurs, our business, prospects,financial condition and results of operation would be materially and adversely affected.xxviii

29. We may face opposition from local communities and other non-governmental organizations inconnection with our construction and operation of hydroelectric power projects, which may delay orotherwise hinder the construction or development of such projects or negatively affect our corporateimage.Generally, the development of hydroelectric power projects globally and in India has faced oppositionfrom special interest groups, as well as local communities located in the vicinity of such projects. Forexample, we have in the past encountered opposition to the construction or operation of the NJHPS,which resulted in our having to cease construction activities on the project several times. This resultedin substantial delays to the project completion date, and there can be no assurance that we will not facesimilar opposition in the future. We have also encountered similar opposition in our construction of theRampur Project, as well as certain instances of sabotage during the construction process. For example,during the construction of the Rampur Project, the power lines which supplied the project site for theRampur Project were cut, and power interruptions were experienced. This caused the water pumps atthe excavation sites to cease pumping water out of the excavation site, and as a result certainconstruction equipment experienced water damage. In addition, our employees and those of ourcontractors have on several occasions in the past been prevented from entering the work site.We are also aware of some non-governmental organizations which have in the past opposed ourdevelopment of the NJHPS, and which are currently opposing our development of the Rampur Project.In particular, in February 2006, a non-governmental organization, citing local community oppositionand lack of adequate environmental studies and safeguards, notified its opposition to the constructionof the Rampur Project to Government authorities and to the World Bank. We responded to the issuesidentified in the letter to the Government authorities concerned and to the World Bank, and no furtheraction was taken or deemed to be necessary by such parties. The same non-governmental organizationhas opposed our application to the CDM Executive Board for carbon emission reduction credits inconnection with our development of the Rampur Project, and has issued a letter to the CDM ExecutiveBoard detailing such opposition.Significant opposition by such parties, including by way of litigation or acts of sabotage against ourproject facilities or projects under construction, may result in delays in the construction or thecommencement of commercial operations of projects under construction, require us to cease operationsat operational projects, or result in the incurrence of increased or additional costs, expenses andcontingent liabilities. Our reputation and corporate brand equity may also be adversely affected as aresult of negative publicity associated with such opposition. If this occurs, our business, prospects,reputation, brand equity, profitability, financial condition and results of operation may be materiallyand adversely affected.30. We have not registered our trademark or logos under the Trademark Act 1999.We do not presently own, nor have we registered, any intellectual property rights over our name andlogo under the Trademark Act 1999, and consequently do not enjoy the rights accorded thereunder withrespect to the usage of our name and logo. Failure to protect our intellectual property rights throughregistration under the Trademark Act 1999 may allow a third party to use our intellectual propertywithout our consent, and if this occurs, our brand equity may be diluted or adversely affected.31. We do not have certain records pertaining to historical legal and secretarial information.We have in the past misplaced certain forms filed by us with the Registrar of Companies from time totime, evidencing allotments of Equity Shares to the Government and the state government of HimachalPradesh. As a result, information relating to the same in this Red Herring Prospectus has been obtainedfrom the books of records of our Company.32. Certain of our power purchase agreements have expired.Two of our power purchase agreements, entered into with the Power Development Department ofJammu & Kashmir and the Uttar Pradesh Power Corporation Limited, respectively, have expired.There can be no assurance that we will be able to renew these power purchase agreements on termssimilar to the previous agreements, or at all. If we are unable to do so, the share of electricity allocatedto these two distribution licensees will be deemed to be unallocated power, and the Government mayallocate such power to various states and union territories in the Northern region of India on adiscretionary basis. There can be no assurance that the Government will make such allocation on atimely basis or at all, and in the event that such power is not allocated, we will be subject toxxix

availability-based tariff fluctuations and our revenues, profitability, financial condition and results ofoperation may be materially and adversely affected.33. We are dependent on external sources of funding for our expansion plans and we may not be able toobtain financing for our projects on commercially acceptable terms.We require significant additional capital to finance the expansion and development of our business, inparticular, our pipeline of existing projects. As of the date of this Red Herring Prospectus, based oncurrent project estimates, we would require Rs. 118,318 million to fund the construction anddevelopment of our pipeline projects (excluding the Tipaimukh Project). We expect our proposedcapital expenditures to be funded through our internal cash flows, financial support from theGovernment and debt financing. Our ability to finance our capital expenditure plans is subject to anumber of factors, some of which are beyond our control, including tariff regulations, our results ofoperations, general economic and capital market conditions, borrowing or lending restrictions, if any,imposed by state governments, the Government and the RBI, our ability to obtain financing onacceptable terms, and the amount of dividends required to be paid to the Government and our publicshareholders. Further, adverse developments in international and domestic credit markets may affectour ability to obtain financing and may significantly increase our overall cost of funds. There can be noassurance that we will be able to meet our capital expenditure requirements, and if this occurs, ourdevelopment of our pipeline of existing projects and prospects may be adversely affected.34. We have incurred significant indebtedness and further intend to incur substantial borrowings inconnection with the development of our hydroelectric power projects.As of December 31, 2009, our aggregate long-term indebtedness amounted to approximately Rs.17,463.7 million. Our current debt equity ratio is 0.26:1.The following table sets forth the debt equityratios of certain of our competitors which we believe to be representative of our industry:Company, FY 09, Rs Mn Long Term Debt Equity Debt Equity ratioJP Power Ventures* 7,411.7 10,751.5 0.69:1KSK Energy Ventures, (consl.) 20,375.7 19,821.2 0.46:1NHPC 82,123.8 179,806.2 0.46:1Average 0.72:1*Formerly known as Jaiprakash Hydro-Power Limited.Source: Annual Reports for each of the companies listed above for the financial year ended March 31, 2009Our ability to make scheduled principal or interest payments on our indebtedness, including under ourfinancing arrangements with the World Bank, and to fund our ongoing operations and the developmentand financing of our existing pipeline of projects, will depend on our future performance and ability togenerate cash which, to a certain extent, is subject to general economic, financial, competitive,legislative, legal, regulatory and other factors, as discussed in this section, many of which are beyondour control. If our future cash flows from operations and other capital resources are insufficient toservice our financial obligations, including our obligations to the World Bank, or to fund other liquidityor project development needs, we may be forced to sell assets, or to attempt to restructure or refinanceour existing indebtedness, or to cease the development of certain of our projects. No assurance can begiven that we would be able to accomplish any of these measures on a timely basis or on satisfactoryterms or at all.35. We are controlled by the Government, who will continue to own a majority of our outstanding sharecapital following the Offer.After the completion of the Offer, the Government will continue to own a majority interest in the equityof our Company. Accordingly, the Government, acting through the MoP, will be in a position to exertsignificant influence over our affairs, including as to whether we undertake a particular project, andwill be able to influence the outcome of any shareholder or board resolutions without regard as to howother shareholders may vote. There can be no assurance that the Government, as our controllingshareholder, will not have objectives which will not conflict with our business goals and objectives,xxx

and the interests of the Government may not necessarily be aligned with that of our other shareholders.The Government may also be able to deter or delay a future takeover or change of control of ourCompany.36. Our generation capacity is subject to substantial variations in water flow, due to climatic conditionsand varies seasonally.The amount of power generated by hydroelectric generation facilities is dependent on available waterflow, and fluctuates due to variations in water flow which in turn depends on factors such as rainfall,snowfall, snowmelt or other seasonal and climatic conditions, as well as the carrying capacity of theriver.We have typically generated most of our power during the May through September period due tosnowmelt and the monsoons. Substantial snowmelt or rainfall during these months generally leads tohigher generation at the NJHPS due to the increased water flow, subject to silt levels. For example, forthe year ended March 31, 2009, approximately 69.1% of our actual annual generation of 6,609 MU wasgenerated during the months of May 2008 to September 2008.With respect to our existing pipeline projects, while we have carried out feasibility studies andestimated the water flows for the respective project sites based on output projections, there can be noassurance that actual water flows will be consistent with our projections or that the water flow requiredto generate the projected outputs will be sustained after completion of construction. Similarly, there canbe no assurance that material hydrological events will not impact the conditions that currently exist atthese project sites. Accordingly, adverse hydrological conditions, whether seasonal or for an extendedperiod of time, that result in inadequate or inconsistent water flow may render our hydroelectricgeneration facilities incapable of generating energy in accordance with current estimates, which mayadversely affect our business, prospects, and increase the period of cost recovery associated with suchprojects.37. The accumulation of silt in waterways can damage our equipment and cause us to cease operationsfor extended periods of time.Our operations may be affected by silt build-up and sedimentation levels. Silt and sediment mayaccumulate behind dam walls and prevent the silt from being washed further downriver. Excess levelsof silt may occur in waterways due to changes in environmental conditions, exacerbated by humanactivities such as agriculture and construction occurring upstream from the dam. High concentrations ofsilt in water can cause erosion, corrosion or cavitation damage in the hydroelectric turbines of ahydroelectric generation facility or may lead to blockages in the turbines. Any such damage orblockage may require us to suspend power generation, which may lead to reductions in revenues,including the associated efficiency incentive payments under the current tariff regime. In addition, wemay be required to incur additional costs from time to time to carry out dredging and repairs orreplacements of affected equipment or parts. Since 2007, we have adopted a policy of shutting downgeneration operations at the NJHPS where the silt load exceeds 4,000 parts per million in the riverupstream of the reservoir or dam.We have in the past reduced generation, or ceased operations altogether at the NJHPS due to highlevels of sedimentation. For example, we have in the past ceased operations for periods of between afew hours and five days due to silt levels in the Sutlej River being excessively high.In the event we are required to reduce our generation activities or to shut down operations at our plantdue to excessively high silt levels, our business, profitability, financial condition and results ofoperation may be materially and adversely affected.38. We may be affected by international and domestic disputes over water usage and management.India is party to a number of international agreements that seek to promote long-term watermanagement across international boundaries, including a water-sharing treaty between India andBangladesh on the River Ganges, the Indus Water Treaty between Indian and Pakistan and severaltreaties between India and Nepal. In addition, there are several Indian inter-state water sharingagreements under which costs are shared with respect to water and irrigation. However, sovereigntyover water flows is hard to define and water management and allocation policies are difficult toenforce, even though definitive agreements have been ratified by states, regions or at a national level.Our business and future prospects may be adversely affected should our projects, or the watercoursesxxxi

on which our projects are located, become the subject of disputes relating to water usage at a local,state or international level.In addition, our projects may be affected by actions taken by third parties upstream of our projects,both within Indian territories and in territories outside of India, which may be beyond our control. Forexample, our operations on the Sutlej river are affected by activities which take place upstream fromthe NJHPS on the tributaries, main river, and in the catchment area, in India and China.39. We are dependent on various contractors for the construction and development of our projects andfor the supply of materials and equipment, and any failure on their part to perform their obligationsmay adversely affect our operations.We rely on third party contractors for the construction and development of our projects. Accordingly,the timing and quality of construction of our projects depends on the availability and skill of thecontractors which we engage. We also rely on third party suppliers to provide us with raw materialsused in the construction of our projects, such as cement and steel. We do not have direct control overthe quality of materials supplied by such suppliers or over the logistics by which such materials aresupplied to us.Certain execution risks we face include:• contractors may not be able to complete construction and installation on time, within budget forcontracts on a variable cost basis, or to the specifications and standards that have been set in thecontracts with them;• contractors may fail to comply with laws and regulations relating to health, safety, environmentaland other employee related concerns, which our Company may be found to be responsible forirrespective of whether our agreements with such contractors disclaim responsibility for suchissues;• delay in the delivery of equipment or materials;• delays in achieving commercial operation by scheduled completion dates;• assumptions and estimates contained in the feasibility studies for these projects may prove to beinaccurate;• expansion into different geographical markets would result in our having to use contractors withwhom we are not familiar, which could increase the risk of cost overruns, construction defectsand failures to meet scheduled completion dates; and• we may be responsible under applicable Indian laws for wage payments to contract labourersengaged by our contractors, although we do not engage such labourers directly. Furthermore,pursuant to the provisions of the Contract Labour (Regulation and Abolition) Act, 1970, we maybe required to retain such contract labourers as our employees. Any requirement to fund suchpayments and any such order from a court or any other regulatory authority may adversely affectour business and results of operations.Contractors and suppliers in our business are generally subject to liquidated damages payments forfailure to achieve timely completion or performance shortfalls. They may also give limited warrantiesin connection with design and engineering work as well as provide guarantees and indemnities to covercost overruns and additional liabilities. However, liquidated damages provisions, guarantees andindemnities may not address all losses, damages or risks or cover the full loss or damage suffered dueto construction delays, performance shortfalls, or the entire amount of any cost overruns. We maytherefore not be able to recover from a contractor or suppliers the full amount owed to us.Our contracts with third party suppliers or contractors do not generally cover indirect losses such asloss of profits or business interruption and certain risks such as unforeseen site and geologicalconditions. Further, although we believe that our relationships with our contractors and suppliers arecordial, we cannot assure you that such contractors and suppliers will continue to be available atreasonable rates and in the areas in which we conduct our operations. If some of these third parties doxxxii

not complete our orders satisfactorily or within the stipulated time, our reputation and financialcondition may be adversely affected.40. Significant increases in prices or shortages of building materials may increase our projectdevelopment costs and cause the actual cost of such project development to vary significantly frominitial project estimates.The cost of construction of our projects is affected by the availability, cost and quality of raw materials.Principal raw materials used in the construction of hydroelectric power projects include cement andsteel. The prices and supply of these and other raw materials depend on factors not under our control,including general economic conditions, competition, production levels, transport costs and importduties. If we are unable to obtain required raw materials in the quantities we need and at reasonableprices, our ability to meet our material requirements for our projects may be impaired, our constructionschedules may be disrupted and our cost estimates could be significantly increased and our business,prospects, financial condition and results of operations may be materially and adversely affected.41. We may not have adequate insurance coverage.The hydroelectric power industry is subject to significant risks arising from the development,construction and operation of hydroelectric generation facilities in remote locations, which could resultin damage to, or destruction of power generation equipment and facilities, as well as accidents leadingto personal injuries or death, environmental damage, operational or maintenance delays anddisruptions, monetary losses and potential legal liabilities.For example, during the construction phase of the NJHPS, we relied on insurance coverage provided byour contractors to insure against damage and loss to the project. Further, we also maintained insurancethrough such contractors against risks associated with assets and infrastructure that were ancillary tothe construction of the project, such as roads, administration buildings or housing provided to on-siteworkers. We currently maintain insurance against certain risks in the operation of our business and theNJHPS in the types and amounts which our management believes to be consistent with industrypractice, and as required under the terms of our agreements and other statutory requirements. We relyon insurance coverage provided by our contracts to insure against damage and loss with respect to theRampur Project. For a description of insurance policies maintained by us, see “Description of OurBusiness—Insurance” on page 77.Our insurance policies do not provide coverage against all losses related to our operations. Forexample, we have not obtained coverage for economic losses sustained by our Company which areattributable to breakdown of machinery. Accordingly, the occurrence of losses, liabilities and damageswhich are not covered by our insurance policies, or which exceed the specified minimum coverageamount, could have a material adverse effect on our business, prospects, financial condition and resultsof operations. There can be no assurance that we will be able to renew our existing insurance coverageor procure additional insurance coverage which our management may subsequently deem to benecessary at economically acceptable premiums, or at all.42. Our expansion into emerging geographic markets exposes us to risks associated with investing andcarrying out operations within those markets.We are exposed to general financial, political, economic and business risks associated with ouroperations in overseas jurisdictions. In particular, we have been awarded the Arun-III Project by theNepalese government through a competitive tender process.While these projects offer strong growth and diversification potential, especially in developingeconomies such as Nepal and Bhutan, they also present a higher degree of risk than in more developedeconomies. There are business risks inherent in developing and servicing new markets. For instance,economic conditions may be more volatile and legal systems may be less developed and unpredictable.We are also exposed to risks associated with lack of cultural and operational experience in suchjurisdictions, such as in procuring adequate local contractors and supplies, and deficiencies inknowledge of local customs and regulations. This may result in unforeseen delays or disruptions to ourproject development, or may otherwise adversely affect our future expansion strategies, business andprospects in such jurisdictions.43. We may be unable to obtain licenses and other approvals required for the development or operationof our projects.xxxiii

Hydroelectric power projects are typically developed in three stages by a central public sectorundertaking. The first stage involves the survey and investigation of the proposed project site and thepreparation of a pre-feasibility evaluation study. The second stage involves the detailed investigationand preparation of a DPR and the commencement of pre-construction activities such as the landacquisition process. The third and final stage involves the execution of the project after obtaining allrequisite approvals from central and state regulatory authorities, including approvals from the PIB,CCEA, MoP, the Planning Commission, the MoEF and the CEA. We also may require clearances fromstate pollution control boards and the ministry of water resources, as well as certain other generallicenses and approvals required for our business operations.In addition, we also consult with these regulatory bodies on an ongoing basis in order to approve anycapital expenditures, cost overruns or other additional or increased expenditures which vary fromoriginal project estimates. Further, certain regulatory approvals may expire due to delays in the projectcompletion schedule, and fresh applications for such approvals may need to be made to the relevantauthorities, which in turn may result in further delays to the project while such approvals are beingprocessed. We have applied for the grant of certain approvals for our ongoing projects which are yet tobe obtained.There can be no assurance that we will be able to receive all requisite approvals and clearances in atimely manner for the execution of our projects, or at all. If this occurs, we may not be able to recovercosts incurred in the initial stages of our project preparation, or during the construction process. For thedetails of such pending approvals, see section titled “Government and Other Approvals” on page 161.44. The risk of environmental damage or materially adverse environmental consequences may force usto restrict the scope of our projects or incur substantial compliance or restorative costs.Certain environmental organisations have expressed opposition to hydroelectric power stations basedon the allegation that they cause loss of habitat for, or destruction of, marine life and have adverseecological effects on waterways. In addition, dams create large reservoirs over what used to be dryland, which may also result in destruction of wildlife habitats, the need for resettlement of residentpopulations or urban centres, increased sediment in rivers and the production of methane fromsubmerged forests. Due to these factors, environmental regulators may impose additional ongoingrestrictions on our operations that would limit our ability to generate revenues. We may also be subjectto significant financial penalties for any environmental damage caused. Financial losses and liabilitiesas a result of increased compliance costs or due to environmental damage may affect our reputation andfinancial condition.We have in the past been issued with notices from the Himachal Pradesh State Environment Protectionand Pollution Control Board for certain violations of the Air (Prevention and Control of Pollution) Act,1975 and the Water (Prevention and Control of Pollution Act), 1974. These notices were issued in2004, alleging failure by our Company to comply with the terms of our consents and licenses withrespect to the operation of the NJHPS. We responded to these notices within the stipulated time periodand no further action was taken by the authorities. In addition, one of our contractors was issued with anotice by the same regulatory authority relating to non-installation of pollution control devices at a site.This contractor took remedial action and no further action was taken by the authorities with respect tothis violation.45. We may not be able to effectively manage our growth or development of our existing pipeline ofprojects.As of December 31, 2009, we have one operational project, the NJHPS, and are in the process ofconstructing the Rampur Project. All of our other pipeline projects are in various developmental stages.The development of these projects will place significant demands on our management as well as on ourfinancial, accounting and operating systems. It may also place significant pressure on the adequacy ofour capitalization and financial resources. As we proceed with the development of additional projects,we may not be able to continue to execute such projects efficiently, which may result in delays,increased costs and diminished effectiveness and quality. An inability to manage our growth effectivelyon favourable terms and at acceptable quality standards may have an adverse effect on our business,prospects, cashflows, other resources, profitability, financial condition, reputation, corporate brandequity and results of operations, and may consequently impact the trading price of our Equity Shares.As we are a development stage company and due to the long gestation period required for hydroelectricxxxiv

power projects, our historical financial statements may not be an accurate indicator of our futurefinancial performance.46. We are dependent on our management team, skilled personnel and our ability to attract and retainsuch personnel.Our operations are dependent on our key management personnel for, among others, strategic businessdirections, customer relations and operational decisions. Any inability to retain the services of any suchkey personnel may adversely impact our operations and our performance.Our project operations require skilled labor and technical specialists, such as geologists and engineers.Our ability to continue expanding our business may be limited by labor constraints as our competitors,being other public sector enterprises engaged in the energy sector and IPPs compete for increasinglyscarce labor resources. Our success depends, among other things, on our ability to attract, train andretain a sufficient number of skilled employees with the relevant skills and expertise to execute andoperate our projects. If we are unable to attract, train or retain skilled personnel, our ability to continueour existing operations may be adversely affected, which may in turn affect our business, prospects,profitability, financial condition and results of operations. For example, we have in the pastexperienced a shortage of skilled hydroelectrical engineers and technicians, due in part to theliberalization of the Indian power industry and the increase in numbers of market entrants who requiredexperienced labour for their operations. This resulted in our having to schedule extra working hoursand shifts for our existing staff, when we were unable to recruit sufficient skilled labor and technicalspecialists for our operating requirements.47. Our net income in future periods may be affected if we are unable to benefit from certain taxincentives in the future.A key objective of the Hydro Power Policy 2008, is to encourage and increase private investment in thedevelopment of hydropower by providing financial benefits such as income tax holidays for periods ofup to 10 years and duty-free imports of capital goods to developers of mega hydropower projects.Further, there are a number of tax incentives provided to us under the Central Sales Tax Act, 1956, theCustoms Tariff Policy, the I.T. Act and the EXIM Policy. For the financial years ended March 31, 2008and 2009, tax expenses constituted approximately 14.1% and 32.0% of our profit after taxes.Due to changes in applicable law, we may not be able to benefit from these tax incentives in the future.Consequently, our profitability, financial condition and results of operations may be affected. Forfurther information relating to the tax benefits and incentives enjoyed by us, see “Statement of TaxBenefits” on page 40.48. Changes in technology may affect our business by making our equipment or power projects lesscompetitive or obsolete.Our future success will depend in part on our ability to respond to technological advances andemerging hydropower generation industry standards and practices in a cost-effective and timelymanner. The development and implementation of such technology entails technical and business risks,and may require substantial capital outlays. There can be no assurance that we will be able to finance orsuccessfully implement new technologies effectively, or to modify our existing systems to incorporatenew industry standards. If we are unable for any reason to adapt in a timely manner to changing marketconditions, customer requirements or technological changes, our business, prospects, financialcondition and results of operations may be adversely affected.49. We face extensive competition for the award of new hydroelectric power projects.The statutory and regulatory framework for the Indian power sector, including the hydropower sector,has changed significantly in recent years and is likely to continue evolving over the next few years.Changes in the tariff regime based on the CERC Approach Paper and the unbundling of the SEBs andconsequent restructuring of companies in the power sector, as discussed in the risk factors above, openaccess and parallel distribution, and liberalised licensing requirements for, and tax incentives applicableto, companies in the hydroelectric power sector, may provide opportunities for increased private sectorinvolvement in power generation. For instance, a key objective of the Hydro Power Policy 2008 is toencourage and increase private investment in the development of hydroelectric power throughproviding financial benefits such as an income tax holiday for 10 years from the date on which theproject is commissioned and duty-free imports of capital goods to developers of mega hydropowerxxxv

projects. The Hydro Power Policy 2008 also seeks to encourage joint ventures with private developersand the use of the independent power producer, or IPP, model, as well as to promote power trading andspeeding up clearance procedures.Large Indian businesses that already have a presence in the Indian power sector, specifically in captivepower generation, may seek to expand their operations in the sector. The power sector in India mayalso attract increased investment from international companies with greater resources and assets than usand which may be able to achieve better economies of scale allowing them to bid profitably at morecompetitive rates. In addition, there may be increased competition from national and state powerutilities.50. Significant differences exist between Indian GAAP and U.S. GAAP, which may be material toinvestors’ assessments of the financial condition of our Company.The financial statements included in this Red Herring Prospectus are prepared and presented inconformity with Indian GAAP consistently applied during the periods stated in those reports, except asotherwise restated in accordance with SEBI and Companies Act requirements for the purposes of theOffer, and no attempt has been made to reconcile any of the information given in this Red HerringProspectus to any other principles or to base the information on any other standards. Indian GAAPdiffers from accounting principles with which prospective investors may be familiar with in othercountries, such as IFRS and U.S. GAAP. Investors should rely upon their own examination of ourCompany, the terms of the Offer and the financial information contained in this Red HerringProspectus. See section titled “Principal Differences between Indian GAAP, U.S. GAAP and IFRS”on page F32.Risks Relating to IndiaWe are a company incorporated in India and substantially all of our assets and operations are presently locatedin India. All of our directors reside within India. Our current sole operational project is located in the state ofHimachal Pradesh in India. As a result, future political, economic, legal and social conditions in India and inHimachal Pradesh, as well as certain actions and policies that the Government may or may not take or adopt,could have a material adverse effect on our business, prospects, financial condition and results of operationsand the market price of our Equity Shares.51. A slowdown in India’s economic growth may adversely impact our business.Our performance and the quality and growth of our assets are necessarily dependent on the health ofthe overall Indian economy, which may be adversely affected by a general rise in interest rates, naturalcalamities, such as earthquakes, a tsunami, floods and drought, commodity and energy prices, andprotectionist efforts in other countries or various other factors. In addition, the Indian economy is in astate of transition. The share of the services sector of the economy is rising while that of the industrial,manufacturing and agricultural sectors is declining. It is difficult to gauge the impact of thesefundamental economic changes on our business. Any slowdown in the Indian economy, or futurevolatility in global commodity prices, may adversely affect our business.52. The Indian economy has sustained varying levels of inflation in the recent past.India has experienced very high levels of inflation during the period between 2008 and 2009, withinflation peaking at 8.4%. In the event of a high rate of inflation, our costs, such as salaries, price oftransportation, wages, raw materials or any other of our expenses may increase. Accordingly, high ratesof inflation in India could increase our costs, and would materially and adversely affect ourprofitability, financial condition and results of operation.53. Political and social instability in India may adversely affect the economy, which in turn could have amaterial adverse effect on our business, prospects, financial condition and results of operations.The Government has traditionally exercised and continues to exercise a significant influence over manyaspects of the economy. Our business, and the market price and liquidity of our Equity Shares, may beaffected by changes in the Government’s policies, including taxation. Social, political, or otherdevelopments in or affecting India, acts of war and acts of terrorism could also adversely affect ourbusiness.xxxvi

Since 1991, successive Indian governments have pursued policies of economic liberalisation, includingthrough significantly relaxing restrictions on the private sector. Nevertheless, the role of the Indiancentral and state governments in the Indian economy as producers, consumers and regulators hasremained significant. The current Government, which came to power in May 2009, is headed by theIndian National Congress and is a coalition of several political parties. Although the currentGovernment has announced policies and taken initiatives that support the economic liberalisationpolicies that have been pursued by previous governments, the rate of economic liberalisation maychange, and specific laws and policies affecting banking and finance companies, foreign investmentand other matters affecting investment in our securities may change as well. Any major change ingovernment policies might affect the growth of Indian economy and thereby our growth prospects.Additionally, as economic liberalisation policies have been a major force in encouraging privatefunding of power sector development, any change in these policies may have a significant impact onpower sector development and business and economic conditions in India generally, which mayadversely affect our business, our future financial performance and the price of our Equity Shares.54. Terrorist attacks on the United States and responses of the United States and/or its allies thereto andterrorist activities in India have led to substantial and continuing economic and social volatility,which may materially and adversely affect our businesses.The terrorist attacks on the United States on September 11, 2001, together with the military responseby the United States and its allies in Afghanistan and continuing military activities in Iraq, haveresulted in substantial and continuing economic volatility and social unrest in Asia. The recent terroristattacks in Asia, including the major terrorist attack in Mumbai in November 2008, have exacerbatedthis volatility. Further developments stemming from these events or other similar events could causefurther volatility. Any additional significant military or other response by the United States and/or itsallies, or any further terrorist activities, could also materially and adversely affect internationalfinancial markets and the Indonesian economy.There can be no assurance that further terrorist acts will not occur in the future. Following the militaryinvolvement of the United States and its allies in Iraq, a number of governments have issued warningsto their citizens in relation to a perceived increase in the possibility of terrorist activities in variousAsian countries, targeting foreign, particularly U.S., interests. Such terrorist acts could destabilize Indiaand increase internal divisions within the Government as it considers responses to such instability andunrest, thereby adversely affecting investors’ confidence in India and the Indian economy. Violent actsarising from and leading to instability and unrest have in the past had, and could continue to have, amaterial adverse effect on investment and confidence in, and the performance of, the Indian economy,and in turn our business. Any of the events described above, including any terrorist attack targeted atour infrastructure, projects and equipment, could cause interruption and materially and adversely affectour business, prospects, financial conditions and results of operations.55. Any downgrading of India’s sovereign debt ratings by an international rating agency may have anegative impact on our business.Currently, India’s sovereign foreign currency long-term debt is rated “Baa3” by Moody’s, “BBB-” byStandard & Poor’s, and “BBB-” by Fitch Ratings Service (“Fitch”) and its short-term foreign currencydebt is rated “P-2” by Moody’s, “A-3” by Standard & Poor’s and “F3” by Fitch. These ratings reflectan assessment of the Government’s overall financial capacity to pay its obligations and its ability orwillingness to meet its financial commitments as they become due.No assurance can be given that Moody’s, Standard & Poor’s, Fitch or any other statistical ratingorganization will not further downgrade the credit ratings of India or other Indian companies. Any suchdowngrade could have an adverse impact on liquidity in the Indian financial markets, the ability of theGovernment and Indian companies, including us, to raise additional financing and the interest rates andother commercial terms at which such additional financing is available and could have a materialadverse effect on us.56. Labor activism and unrest may materially and adversely affect us.Our Company had 1,801 full-time employees as of December 31, 2009. We maintain good workingrelationships with our employees, labour unions and associations, and have not experienced anyoperational disruptions from labour relations in the past. However, there can be no assurance that wewill not in the future experience disruptions to our operations due to industrial relation disputes or otherproblems with our work force, which may adversely affect our business and results of operations.xxxvii

Further, efforts by labour unions to organise our employees may divert management’s attention andincrease operating expenses.We typically enter into contracts with independent contractors to complete specified assignmentsduring the construction phase of our projects, and these contractors are required to source the labournecessary to complete such assignments. Even though we do not engage these labourers directly,should our contractors default on wage payments, we may be held responsible under Indian law forwage payments to labourers engaged by such contractors. Any requirement to fund such payments mayadversely affect our profitability, financial condition and results of operations. Further, pursuant to theprovisions of the Contract Labour (Regulation and Abolition) Act 1970, we may be required to absorbsome of these contract labourers as our employees.Labor unrest and activism in India could also disrupt our operations, or those of our suppliers or ourcontractors and could affect the financial condition of Indian companies in general, depressing theprices of Indian securities on the Indian stock exchanges and the value of the Rupee relative to othercurrencies. Such events could materially and adversely affect our business, prospects, financialcondition and results of operations.57. Domestic, regional or global economic changes may materially and adversely affect the Indianeconomy and our business.There has been extraordinary and intensifying disruption and volatility in global capital and creditmarkets since mid-2007, when deterioration in asset prices in the United States sub-prime residentialmortgage market began to impinge substantially on liquidity in the United States, and later in Europeanand Asian capital and credit markets. Volatility and disruption intensified following the filing forbankruptcy by Lehman Brothers Holdings Inc. in the United States on September 15, 2008 and theextension of a US$85 billion loan (with warrants) by the Federal Reserve Board to AmericanInternational Group on September 16, 2008. Share prices, particularly those of financial institutions,declined sharply globally and such declines, as well as substantial mark-to-market writedowns of assetsby financial institutions, initially of mortgage related assets but later including credit default swaps andother derivative securities, have caused many financial institutions to seek new capital, merge withstronger and larger institutions (voluntarily or at the behest of regulators) and, in some cases, fail.Following these disruptions in the financial sector, there has been a significant reduction in businessactivity in various industries and in consumer spending in developed markets around the world.Consequently, unemployment in these markets has been increasing and some major companies havebeen experiencing significantly diminished results and, in some cases, bankruptcy or a significantthreat of bankruptcy. As of the end of 2008, the United States, various European countries and Japanwere all officially declared to be in economic recession. These extremely negative economicdevelopments have adversely affected developing markets, including India and other Asian countries.In particular, there have been capital outflows from some developing markets and reductions in theirexports and export revenues. Certain developing or smaller economies such as Pakistan, Iceland,Hungary, Belarus, Serbia and Ukraine have sought assistance from the International Monetary Fund(“IMF”) to deal with severe balance of payments difficulties. Throughout Asia, stock market indices,including those of Japan and South Korea, declined sharply in October and November 2008 and Asiancurrencies (excluding the Japanese yen) declined sharply against the U.S. dollar in October andNovember 2008. The eventual duration, magnitude and scope of these extremely negative economicdevelopments remain unknown and economic conditions in developed markets are not expected toimprove substantially in the near term.India and other Asian countries have been negatively affected, along with developing market countriesglobally, by the unprecedented financial and economic conditions in developed markets. Although theGovernment has taken a number of responses to these unprecedented conditions with the aim ofmaintaining economic stability and public confidence in the Indian economy, continuation of theseunprecedented conditions may negatively impact economic growth, the Government's fiscal position,the Rupee exchange rate and other facets of the Indian economy.There can be no assurance that the recent improvements in global economic condition will continue orthe previous adverse economic condition in India and the rest of the Asia-Pacific region will not occurin the future. In particular, a loss of investor confidence in the financial systems of emerging and othermarkets, or other factors, may cause increased volatility in the Indian financial markets and inhibit orreverse the growth of the Indian economy. Any such increased volatility, slowdown or negative growthxxxviii

could materially and adversely affect our business, financial condition, results of operations andprospects, and the trading price of our Equity Shares.58. Natural calamities could have a negative effect on the Indian economy and cause our business tosuffer.India has experienced natural calamities such as earthquakes, floods and drought in the past few years.The extent and severity of these natural disasters determines their effect on the Indian economy. Forexample, as a result of drought conditions in the country during fiscal 2003, the agricultural sectorrecorded negative growth for that period. The erratic progress of the monsoon in 2004 affected sowingoperations for certain crops. Further prolonged spells of below normal rainfall or other naturalcalamities could have a negative effect on the Indian economy, adversely affecting our business and theprice of our Equity Shares.59. Our ability to raise foreign capital may be constrained by Indian law.As an Indian company, we are subject to exchange controls that regulate borrowing in foreigncurrencies. Such regulatory restrictions limit our financing sources for our power projects underdevelopment and hence could constrain our ability to obtain financings on competitive terms andrefinance existing indebtedness. In addition, we cannot assure you that the required approvals will begranted to us without onerous conditions, or at all. The limitations on incurrence of foreign debt mayhave an adverse effect on our business, prospects, financial condition and results of operations.60. Government regulation of foreign ownership of Indian securities may have an adverse effect on theprice of our Equity Shares.Foreign ownership of Indian securities is subject to Government regulation. Under foreign exchangeregulations currently in effect in India, the RBI must approve the sale of our Equity Shares from a nonresidentof India to a resident of India if the sale does not meet the requirements of the RBI Circulardated October 4, 2004. The RBI must approve the conversion of Rupee proceeds from any such saleinto foreign currency and repatriation of that foreign currency from India unless the sale is made on astock exchange in India through a stock broker at market prices. As provided in the foreign exchangerules and regulations currently in effect in India, the RBI will approve the price at which our EquityShares are transferred based on a specified formula, and a higher price per share may not be permitted.The approval from the RBI or any other government agency may not be obtained on terms favourableto a non-resident investor in a timely manner or at all. Because of possible delays in obtaining requisiteapprovals, investors in our Equity Shares may be prevented from realizing gains during periods of priceincreases or limiting losses during periods of price declines.Risks Relating to the Offer61. The price of our Equity Shares may be volatile, and you may be unable to resell our Equity Shares ator above the Offer Price.Prior to the Issue, there has been no public market for our Equity Shares, and an active trading marketon the BSE and the NSE may not develop or be sustained after the completion of the Offer. The OfferPrice of our Equity Shares may bear no relationship to the market price of such Equity Shares after thecompletion of the Offer. The market price of our Equity Shares after the completion of the Offer maybe subject to significant fluctuations in response to, among other factors, variations in our operatingresults, market conditions specific to the power sector in India, developments relating to India andvolatility in the BSE and the NSE and securities markets elsewhere in the world.62. We have issued shares in the last 12 months at a price lower than the Offer Price.Pursuant to the letter from the MoP bearing no. 23/24/2009-H-II dated April 13, 2010 our Companyhas allotted 27,812,500 Equity Shares to the state government of Himachal Pradesh for aggregateconsideration payable of Rs. 409.40 million, prior to the filing of this Red Herring Prospectus with theRoC in connection with the Offer.The Offer Price for our Equity Shares in the Offer will be determined based on the outcome of certainbook building exercises conducted by the BRLMs. If you purchase our Equity Shares, you may paymore for your Equity Shares than the amount paid by the state government of Himachal Pradesh for itsacquisition of Equity Shares. There can be no assurance that any disparity between the Offer Price andxxxix

the price paid by the state government of Himachal Pradesh for its interest in our Company will notadversely affect the market price of our Equity Shares immediately after the Offer.63. Requirements by the Stock Exchanges may restrict significant movements in the daily trading priceof our Equity Shares, and your ability to trade in our Equity Shares may be adversely affected as aconsequence of such restrictions.Subsequent to listing, we will be subject to a daily circuit breaker imposed on listed companies by allstock exchanges in India which does not allow transactions beyond certain volatility in the price of ourEquity Shares. This circuit breaker operates independently of the index-based market-wide circuitbreakers generally imposed by SEBI on Indian stock exchanges. The percentage limit on our circuitbreaker is set by the stock exchanges based on the historical volatility in the price and trading volumeof our Equity Shares. The stock exchanges are not required to inform us of the percentage limit of thecircuit breaker from time to time, and may change it without our knowledge. This circuit breaker wouldeffectively limit the upward and downward movements in the price of our Equity Shares. As a result ofthis circuit breaker, there can be no assurance regarding the ability of shareholders to sell our EquityShares or the price at which shareholders may be able to sell their shares in our Company.64. Conditions in the Indian securities markets may affect the price or liquidity of our Equity Shares.The Indian securities markets are smaller than securities markets in more developed economies. Indianstock exchanges have in the past experienced substantial fluctuations in the prices of listed securities.The Indian stock exchanges have also experienced problems that have affected the market price andliquidity of the securities of Indian companies, such as temporary exchange closures, broker defaults,settlement delays and strikes by brokers. In addition, the governing bodies of the Indian stockexchanges have from time to time restricted securities from trading, limited price movements andrestricted margin requirements. Further, disputes have occurred on occasion between listed companiesand the Indian stock exchanges, and other regulatory bodies that, in some cases, have had a negativeeffect on market sentiment. If similar problems occur in the future, the market price and liquidity of ourEquity Shares could be adversely affected.You will not be able to sell immediately any of our Equity Shares purchased in the Offer until the Offerreceives all required trading approvals.65. Our ability to pay dividends in the future will depend upon our future earnings, financial condition,profitability, working capital requirements, cash flows, capital expenditures and restrictive covenantsin our financing arrangements.Our business is capital intensive and we plan to make additional capital expenditures to complete thepower projects that we are developing. Our ability to pay dividends is also restricted under certainfinancing arrangements that we have entered into and expect to enter into. We may be unable to paydividends in the near or medium term, and our future dividend policy will depend on our capitalrequirements and financing arrangements for our projects, financial condition and results of operations.66. There is no guarantee that our Equity Shares will be listed on the Stock Exchanges in a timelymanner or at all.In accordance with Indian law and practice, permission to list our Equity Shares will not be granteduntil after these shares have been allotted and all other relevant documents authorising the Offer havebeen submitted. There could be a failure or delay in listing our Equity Shares on the Stock Exchanges.Any failure or delay in obtaining the requisite approval would restrict your ability to trade in our EquityShares.67. Any future issuance of our Equity Shares may dilute your shareholding and sales of shares by ourCompany or our controlling or majority shareholders may adversely affect the trading price of ourEquity Shares.Any future equity issuances by us, including in a primary offering or pursuant to the exercise of stockoptions under our employee stock option plan, may lead to the dilution of investors’ shareholdings inour Company and may adversely affect the trading price of our Equity Shares. In addition, anyperception by investors that such issuances might occur could also affect the trading price of our EquityShares.xl

Prominent Notes:• Offer for sale by the President of India, acting through the MoP of India of 415,000,000 Equity Shareseach for cash at a price of Rs. [●] per Equity Share aggregating up to Rs. [●]. The Offer comprises a NetOffer of 411,650,000 Equity Shares and a reservation of 3,350,000 Equity Shares for purchase by EligibleEmployees. The Offer and Net Offer shall constitute approximately 10.03% and 9.95% of the paid upcapital of our Company, respectively.• The net asset value per Equity Share of Rs.10 was Rs. 16.45 each as at December 31, 2009, as stated inthe restated financial statements prepared in accordance with Indian GAAP, and restated in accordancewith SEBI ICDR Regulations.• The net worth of our Company was Rs. 67,583.2 million as at December 31, 2009, as stated in therestated financial statements of our Company prepared in accordance with Indian GAAP and restated inaccordance with SEBI ICDR Regulations. For more information, see section titled “FinancialStatements” on page F1.• The average cost of acquisition per Equity Share by the GoHP is Rs 10.12. The average cost ofacquisition for the GoI is Rs 10. With effect from September 10, 2009, the original equity shares ofRs. 1,000 each in our Company have been split into Equity Shares of face value of Rs. 10 each.For further information regarding the allotment of Equity Shares to our Promoters, see section titled“Capital Structure” on page 23.• Except as disclosed in “Capital Structure” on page 23, during the period of six months immediatelypreceding the date of the filing of this Red Herring Prospectus, no financing arrangements existedwhereby any of our Promoters, Directors and their respective relatives may have financed the purchaseof Equity Shares by any other person, other than in the normal course of the business of such financingentity.Our Company has not made any loans and advances to any person(s)/ company in which our Directorsare interested, except as disclosed in the section titled “Financial Statements” on page F1.• Investors are advised to see section titled “Basis for Offer Price” on page 37 .• Investors may contact the BRLMs or the Syndicate Members or the Compliance Officer with respect toany complaints, information or clarifications pertaining to the Offer. Each of the BRLMs and SyndicateMembers is obliged to provide such clarification or information to the investors. For contact details of theBRLMs, Syndicate Members or the Compliance Officer, please see section titled “General Information”on page 10. For further information, see section titled “Offer Procedure” on page 191.All grievances relating to the ASBA process may be addressed to the Registrar to the Offer, with acopy to the relevant SCSB, giving full details of the complainant, including name, address, number ofEquity Shares applied for, Bid Amount blocked, ASBA Account number and the Designated Branch ofthe SCSB where the ASBA Form was submitted by the ASBA Bidder.• For details in relation to related party transactions during the year ended March, 31, 2009, and thenature of such transactions, see the notes on related party transactions in the section titled “FinancialStatements” on page F-1.• Trading in Equity Shares for all investors shall be in dematerialised form only.• Our Company was incorporated on May 24, 1988 under the Companies Act with the RoC under thename “Nathpa Jhakri Power Corporation Private Limited”. The word “Private” was deleted underSection 620 read with Sections 21 and 23 of the Companies Act with effect from November 3, 1988.Subsequently, pursuant to the shareholders’ resolution dated September 17, 2002, the name of ourCompany was changed from “Nathpa Jhakri Power Corporation Limited” to “Satluj Jal Vidyut NigamLimited” as the operations of our Company were based in and around the river Sutlej. Consequentthereto a fresh certificate of incorporation dated November 11, 2002 was issued by the RoC. Further,pursuant to the shareholders resolution dated September 10, 2009, the name of our Company was againchanged from “Satluj Jal Vidyut Nigam Limited” to “SJVN Limited” as the operations of our Companyxli

expanded and were no longer confined to the area in and around the river Sutlej. By the sameresolution dated September 10, 2009, our Company was converted into a public limited company.Accordingly a fresh certificate of incorporation dated September 22, 2009 was issued by the RoC. Foradditional information concerning changes in our Company’s name and changes in our Company’sMemorandum of Association, see section titled “History and Certain Other Corporate Matters” onpage 99.• By way of letter bearing no. 6\23\2010-FJU dated April 13, 2010 FIPB has clarified that its approval isnot required for the transfer of the Equity Shares to non resident investors. Further, the RBI vide itsletter dated April 15, 2010 and bearing no. FE.CO.FID.No.- /10.21.185/2009-10 has confirmed that ithas no objection to the transfer of 415,000,000 Equity Shares by the President of India, acting throughthe Ministry of Power, Government of India. For further details regarding the requirement for the saidapproval and other ancillary matters in this regard, see the sections titled “Regulations and Policies inIndia,” “Government and Other Approvals” and “Offer Procedure” on pages 87, 161 and 191respectively.xlii

SECTION III - INTRODUCTIONSUMMARY OF INDUSTRYThis summary has been provided for informational purposes only and is qualified in its entirety by, and is subject to,the more detailed information and the financial information set forth elsewhere in this Red Herring Prospectus.Investing in the Equity Shares involves risks. Prospective investors should read this Red Herring Prospectus in itsentirety, including information set forth in the sections titled “Risk Factors” and “Financial Statements” and relatednotes on pages xiii and F1, prior to making a decision to invest in our Equity Shares. Statements contained in thissummary that are not historical facts may be forward-looking statements. Such statements are based on certainassumptions and are subject to certain uncertainties that could cause results to differ materially from theseprojections. Under no circumstances should the inclusion of such information herein be regarded as a representation,warranty or prediction with respect to the accuracy of the underlying assumptions by us or the BRLMs or any otherperson or that these results will be achieved or are likely to be achieved.The power industry in India has historically been characterised by energy shortages, with demand for electricityfar exceeding supply. The continued growth of the Indian economy has accelerated the need for furtherinvestments in the power sector. Apart from the increased need of power for sustenance of growth, India needsto bridge the demand-supply mismatch in the power sector. According to the CEA report titled Power Scenarioat a Glance, December 2009, demand for electricity exceeded supply by 11.0% in FY 2009 (compared to 9.9%in FY2008). The total energy shortage during this period was 85,303 million units. Similarly, India’s peakdemand deficit during this period was 12.0% or 13,124 MW. It is anticipated that by the year 2012, India’s peakdemand for energy will be 152,746 MW with total energy requirements of 969 billion units. According to theHydro Power Policy 2008 and the CEA Monthly Generation Report for November 2009, annual generation hasgrown from about 5 billion units since independence to 723.8 billion units in FY 2009. Energy shortages forFY2006, FY2007 and FY2008 constituted 12.3%, 13.8% and 16.6% of peak demand requirements, respectively.In order to meet growing demand and shortages encountered in various regions, it is estimated that generationcapacity will need to be doubled over the next 10 years, so as to meet peak energy and total energy demands. Inorder to meet the energy requirements of 1,038 billion units and a peak load of 152,746 MW with a 5% spinningreserve, a total capacity addition of about 82,500 MW is required during the 11th Plan of which 12,716 MW hasalready been commissioned as on March 31, 2009 with hydropower contributing 26.7% of the commissionedunits. However, a capacity addition of 78,700 MW comprising 36,874 MW (46.9%) to be developed by centralpublic sector undertakings, 26,783 MW (34%) to be developed by state enterprises and 15,043 MW (19.1%) tobe developed by private developers has been proposed for the duration of the 11th Plan. Out of this, a capacityof 15,627 MW is proposed to be added from hydropower projects comprising 8,654 MW (55.4%) developed bycentral public sector undertakings, 3,482 MW (22.3%) by state enterprises and 3,491 MW (22.3%) by privatedevelopers.The Government has taken various measures in recent years to restructure the power sector to improvecommercial and financial viability and to attract investment. Significant reforms include introduction of theElectricity Act, which has modified the legal framework governing the power sector. The Electricity Act wasdesigned to address systemic deficiencies in the Indian power sector and attract capital for large-scale powerprojects. The Government also recently introduced a three-stage process for the development of newhydroelectric projects in the central sector. The new stage-driven process aims to reduce the time and costoverruns of hydroelectric projects, which have largely taken place as a result of hasty investigation of potentialproject sites and unavailability of proper infrastructure in terms of access to land and roads.The tariff for the period between FY 2005 and FY 2010 was determined by earlier CERC regulations which hassubsequently been modified for the period FY 2009 to FY 2014. The tariff structure prescribed by the CERCcomprises a number of elements including annual fixed charges, incentives and unscheduled interchangecharges. The methodology by which a tariff for a particular project is determined ensures that in order to achievethe guaranteed rate of return on the equity portion of the project, the operational power project will be requiredto operate at a minimum level which is set by CERC. Incentives relating to increased availability and generationin excess of design energy are built into such tariff rates.The Hydro Power Policy 2008, which was introduced by the Government to promote hydroelectric powergeneration, emphasizes increasing private investment in the development of hydroelectric projects. The policyaims to attract private investment by encouraging joint ventures with private developers and the use ofindependent power producer models, besides promoting power trading and facilitating the processing ofstatutory clearances. The policy also provides special incentives for merchant sales of up to 40% of saleableenergy for projects which meet specified time lines. In addition, a local development fund will be created, to1

which 1% of the power generated by a project will be allocated free of cost, for the purposes of providing aregular stream of revenue for income generation and welfare schemes and the creation of additionalinfrastructure and common facilities on a sustained and continued basis over the life of the project.2

SUMMARY OF BUSINESSWe are a hydroelectric power generation company originally established as a joint venture between theGovernment and the state government of Himachal Pradesh to develop and operate the NJHPS. Based oninformation published by the CEA, the NJHPS is currently the largest operational hydroelectric powergeneration facility in India based on installed capacity, with an aggregate generation capacity of 1,500 MW, andis located on the Sutlej River in the state of Himachal Pradesh.The NJHPS is currently our only hydroelectric power project in operation. Through our construction andoperation of the NJHPS, we have gained experience in the design, development, construction and operation ofhydroelectric projects, and the execution and management of all aspects of such projects from the initial stagesof concept to the commissioning, operation and maintenance of such projects. We are currently constructing theRampur Project, which is expected to be a 412 MW hydroelectric power generation facility located downstreamfrom the NJHPS. The Rampur Project is currently projected to be completed and commissioned in 2013. Wehave also been awarded the rights to develop and operate two hydroelectric projects with an expected aggregategeneration capacity of 825 MW by the state government of Himachal Pradesh (in each of which we are expectedto have a 51% participation interest). We have also entered into memoranda of understanding with the stategovernment of Uttarakhand for three hydroelectric projects with an expected aggregate generation capacity of363 MW. We have further agreed to participate in a joint venture with NHPC Limited and the state governmentof Manipur for the development and operation of a 1,500 MW hydroelectric power project to be located inManipur. We have also diversified our operations to target hydroelectric power projects available outside ofIndia, and have been awarded the rights to construct and operate on a build, own, operate and transfer (BOOT)basis, a 900 MW hydroelectric power project to be located in the Sankhuwasabha district of Nepal, throughparticipating in a competitive tender held by the Nepalese government. Through these projects, we expect toincrease our total installed power generation capacity by approximately 3,588 MW.Based on our restated audited financial statements for the years ended March 31, 2007, 2008 and 2009, wegenerated total revenues of Rs. 14,761.7 million, Rs. 14,622.8 million and Rs. 16,348.4 million, respectively,and profit before tax of Rs. 7,692.5 million, Rs. 8,178.0 million and Rs. 10,025.5 million, respectively.Our Competitive StrengthsWe believe that we have the following key competitive strengths:Experience in hydroelectric power project development. We have experience in the development, executionand management of mega-hydroelectric projects through our development and operation of the 1,500 MWNJHPS, which is the largest hydroelectric power generation facility in India based on generation capacity, and islocated in the geo-technically sensitive Himalayan region. We believe that we will be able to leverage ourexperience in developing the NJHPS to effectively develop and operate our existing pipeline of projects, as wellas obtain new projects in the future.Established track record of operational excellence. Since the commissioning of the NJHPS, we haveconsistently met or exceeded Government-set performance targets for our operations, and have been upgraded toa Schedule A public sector undertaking and designated as a Mini-Ratna Category-I public sector undertaking inrecognition of our efforts. We have also obtained ISO quality certifications for our operations and severalawards for excellence in various fields, such as corporate leadership, engineering, financial and operationalstrength, health and safety management, hydroelectric power development, social contribution andenvironmental management. We believe that our established performance track record and experience inexecuting, operating and managing the NJHPS will give us a competitive advantage in developing largehydroelectric power projects, both in India and abroad.Stable revenue stream through long-term power purchase agreements with state electricity boards anddistribution licensees. We have entered into ten power purchase agreements with state utilities in the Northernregion of India, two of which are in the process of being renewed, under which all of the power generated by theNJHPS (except for 12% of our annual generation which is allocated to the state of Himachal Pradesh free-ofchargeand an additional 1% of annual generation from projects located in the state of Himachal Pradesh whichis allocated to a state-established local development fund) is sold to state electricity boards. See “RiskFactors—Internal Risk Factors- Risks Relating to Our Business—We may be required to allocate anadditional one percent of the power generated by the NJHPS to a local development fund established by thestate government of Himachal Pradesh” —on page xix. Payment for sales of electricity to these state utilities3

are typically secured by forms of credit support such as letters of credit issued by reputable financial institutionsor by state government guarantees.Ability to capitalize on performance-based incentives under the current tariff regime. Since the fullcommissioning of the NJHPS in May 2004, we have consistently achieved a monthly plant availability factor ofmore than 82%, which is the normative annual plant availability factor which has been set by the CERC for theNJHPS under the new tariff regulations which are effective from April 1, 2009 to March 31, 2014. Subject todisruptions to our operations arising from factors not within our control such as water supply availability, siltlevels, power evacuation constraints and prevailing weather conditions, we believe that we will be able tomaintain our performance going forward, and will thus be eligible to recover the full amount of capacity chargesas well as qualify for certain performance-based incentives under the new tariff regime based on excessgeneration and normative annual plant availability factor.Established reputation for good corporate governance and environmental and social responsibility. Webelieve that our commitment to our social and environmental responsibilities has been key in establishing ourreputation and credibility as a highly rated power generation company, which we will be able to leverage intendering for new projects going forward, and will also prove to be advantageous in minimizing opposition frompublic interest groups, non-governmental organizations and local communities in our future project areas underdevelopment, thus facilitating our timely completion of such projects.Existing committed work force. We fully recognize the contribution of our employees is integral to theachievement of our ambitious plans and have thus adopted an organizational philosophy which acknowledgesand rewards their contributions.Strong cash position to support project development and operations. We believe that our strong historicalfinancial performance and steady cash flows from our existing operations at the NJHPS are sufficient to fund,through internal resources, the equity contribution portion for our existing pipeline of projects, and support ourworking capital requirements, while at the same time servicing and repaying our existing debt on a timely andreliable basis, and maintaining a healthy level of cash on our balance sheet. We believe that our strong cashposition and cash flow generation capabilities from the NJHPS are attributable to a number of sustainable longtermfactors, including stable customer demand, stable cost structure and an experienced and capablemanagement team.Guaranteed return on capital under prevailing tariff regime. Pursuant to past and prevailing Governmentpolicies, electricity tariffs which may be charged by a power producer with respect to power supplied by it froma particular project are determined based on a formula which incorporates a guaranteed return on equity. UnderGovernment policies and prevailing regulations, up to 30% of aggregate project costs in relation to a project iseligible for the guaranteed rate of return on equity. We anticipate that we will be well positioned to benefit fromGovernment policy incentives as the Indian energy sector continues to develop.Our StrategyThe main elements of our business strategy include the following:Pursue business and capacity expansion plans to meet rising energy demand and increase our market share.We anticipate that demand for energy in India will continue to increase, and we believe that we are wellpositioned to benefit from such increased demand. We estimate that we will add approximately 3,588 MW toour aggregate generation capacity through the development of our existing pipeline of projects, subject tounforeseen circumstances which may cause completion delays or revisions to project parameters, and intend topursue new opportunities for hydroelectric power projects as they become available, both in India and in thesurrounding regions or in countries such as Bhutan and Nepal and elsewhere, which we believe have greatdevelopment potential.Continue to provide sustainable and reliable electricity supply to our customers. We will continue to focus onproviding reliable sustainable energy to new and existing customers through maintaining our performancestandards at the NJHPS, as well as on the development of new hydroelectric power projects in anenvironmentally and socially responsible manner. To this end, we intend to focus on modernizing andmaintaining our operations at the NJHPS in line with internationally recognized quality and technical standards,as well as invest in viable equipment upgrades to further optimize our performance.4

Pursue diversification initiatives. We intend to diversify our business operations into various alternative energyprojects, such as wind power and solar energy projects. In addition to this, we also intend to pursue geographicaldiversification through tendering for hydroelectric power projects outside of India, and to leverage our technicalexpertise and know-how in the hydroelectric power sector into establishing a technical consultancy and advisorybusiness focusing thereon.Maintain our focus on environmental and corporate social responsibility. We have undertaken a number ofenvironmental and corporate social responsibility initiatives and intend to expand our involvement in theseareas. We aim to conduct our business operations in a manner that promotes social responsibility, sustainabledevelopment, minimization of ecological and social disturbances and to raise the living standards of the localcommunities in our project areas and contribute to their advancement. We will continue to monitordevelopments in environmental and social conditions in our operational project areas with the objective ofaddressing any concerns in a timely manner.Increase profitability and shareholder value through capitalization on efficiency incentives under the currenttariff regime and the clean development mechanism scheme. We intend to pursue improvements to ourprofitability with the objective of increasing shareholder value through, among others, capturing to themaximum extent possible financial incentives and benefits associated with increased operational efficiencywhich are available under the current tariff regime, as well as through registering our hydroelectric powerprojects under the United Nations Framework Convention on Climate Change of 1994 to earn certified emissionreduction credits, which may be sold to industrialised countries. We are also in the process of investigating othercarbon trading initiatives which may be applicable to our projects.5

SUMMARY FINANCIAL INFORMATIONThe following tables set forth selected historical financial information derived from the Restated FinancialStatements for the years ended March 31, 2009, 2008, 2007, 2006 and 2005 as well as the audited financialstatements and for the nine-month period ending December 31, 2009. The restated summary financialinformation presented below should be read in conjunction with the financial statements included in this RedHerring Prospectus, the notes thereto and “Management’s Discussion and Analysis of Financial Conditionand Results of Operations” on page 127.RESTATED STATEMENT OF ASSETS AND LIABILITIES(Rs. million)ParticularsAs at DecAs at March 31,31, 2009 2009 2008 2007 2006 2005A. FIXED ASSETSGross Block 86,229.3 85,725.2 83,998.1 81,370.9 79,414.6 79,653.4Less: Depreciation 15,472.2 12,183.6 10,340.8 7,883.3 5,425.7 3,605.6Net Block 70,757.1 73,541.6 73,657.3 73,487.6 73,988.9 76,047.8Capital Works In Progress 7,361.7 5,636.4 2,554.0 1,529.2 944.0 560.3Advances for Capital Works 1,922.3 1,559.9 615.5 173.5 307.6 245.3Construction Stores and Spares 6.1 6.3 6.6 135.8 19.6 7.9Net Block (including capital work in progress) 80,047.2 80,744.2 76,833.4 75,326.1 75,260.1 76,861.3B. INVESTMENTS - - - - - -C. DEFFERED TAX ASSET (NET)Deferred Tax Asset 3,012.4 2,663.6 (22.3) 1,798.3 1,151.8 616.5Less: Payable to Beneficiaries 3,012.4 2,663.6 (22.3) 1,798.3 1,151.8 616.5- - - - - - -D. CURRENT ASSETS, LOANS & ADVANCESInventories 611.5 558.5 536.3 587.1 625.5 337.2Sundry Debtors 2,660.4 3,645.5 3,169.6 2,508.3 7,578.9 3,332.2Cash and Bank Balances 14,871.5 12,714.4 6,936.0 6,210.4 1,333.5 3,427.7Other Current Assets 401.8 825.7 335.5 228.8 33.8 32.5Loans and Advances 6,210.5 4,624.6 6,633.8 5,605.2 4,346.7 2,224.524,755.7 22,368.7 17,611.2 15,139.8 13,918.4 9,354.1E. LIABILITIES AND PROVISIONSSecured Loans 11,305.1 13,075.1 17,109.3 21,868.3 26,828.4 31,371.5Unsecured Loans 6,393.7 8,349.3 3,091.5 3,373.7 3,998.9 4,945.5Income Received in Advance (AAD) 8,493.5 8,493.5 6,491.1 4,488.7 2,526.6 538.7Current Liabilities 4,118.9 4,995.3 5,447.1 3,386.2 3,356.2 2,718.8Provisions 6,741.5 7,434.2 5,389.5 4,747.4 3,637.0 1,845.837,052.7 42,347.4 37,528.5 37,864.3 40,347.1 41,420.3F. SHARE APPLICATION MONEY 167.0 - - - - -NET WORTH ( A+B+C+D-E-F ) 67,583.2 60,765.5 56,916.1 52,601.6 48,831.4 44,795.1G. SHARE CAPITAL 41,088.1 41,088.1 41,088.1 41,088.1 41,088.1 41,088.1H. RESERVES & SURPLUS 26,495.1 19,677.4 15,828.0 11,513.5 7,743.3 3,707.0NET WORTH ( G+H ) 67,583.2 60,765.5 56,916.1 52,601.6 48,831.4 44,795.1Notes:There are no Revaluations Reserves/revaluations carried, so no adjustments are required.The accompanying accounting policies & notes on accounts are an integral part of these statements.6

ParticularsRESTATED STATEMENT OF PROFITS & LOSSESFor the ninemonths endedDec 31, 2009Annexure II(Rs. million)For the Year Ended 31 st March2009 2008 2007 2006 2005INCOMESales (Net)* 14,231.0 14,907.8 13,567.5 14,094.6 10,623.6 12,775.0Other Income 869.0 1,440.6 1,055.3 667.1 2,885.8 674.2Total 15,100.0 16,348.4 14,622.8 14,761.7 13,509.4 13,449.2EXPENDITUREGeneration , Administration and Other Expenses 1,099.1 1,775.1 1,498.7 1,383.3 1,248.2 1,049.2Depreciation 3,259.9 2,342.3 2,399.2 2,456.1 2,325.6 2,182.8Interest and Finance Charges 1,396.2 2,205.5 2,546.9 3,229.8 3,415.3 4,075.4Total 5,755.2 6,322.9 6,444.8 7,069.2 6,989.1 7,307.4PROFIT BEFORE TAX 9,344.8 10,025.5 8,178.0 7,692.5 6,520.3 6,141.8Provision for TaxationIncome Tax- Current Tax 1,591.1 2,425.5 1,002.4 1,185.5 659.4 242.3Fringe Benefit Tax- Current Year - 6.7 6.4 7.1 6.5 -Wealth Tax - 0.1 0.1 0.1 0.1 -1,591.1 2,432.3 1,008.9 1,192.7 666.0 242.3Deferred Tax 348.9 2,685.9 1,820.6 646.4 535.3 616.5Less: Recoverable/Payable 348.9 2,685.9 1,820.6 646.4 535.3 616.5- - - - - -Total Provision for Taxation 1,591.1 2,432.3 1,008.9 1,192.7 666.0 242.3PROFIT AFTER TAX 7,753.7 7,593.2 7,169.1 6,499.8 5,854.3 5,899.5Balance brought forward from last Year 19,677.4 15,828.0 11,513.5 7,743.3 3,707.0 (562.9)Total available for Appropriation 27,431.1 23,421.2 18,682.6 14,243.1 9,561.3 5,336.6APPROPRIATIONSDividend- Interim 800.0 1,100.0 1,360.0 666.7 - 341.4- Proposed - 2,100.0 1,080.0 1,683.3 1,594.3 1,090.2Total Dividend 800.0 3,200.0 2,440.0 2,350.0 1,594.3 1,431.6Corporate Tax on Dividend- Interim 136.0 186.9 231.1 93.5 - 45.1- Proposed - 356.9 183.5 286.1 223.7 152.9Total Tax on Dividend 136.0 543.8 414.6 379.6 223.7 198.0BALANCE CARRIED TO BALANCE SHEET 26,495.1 19,677.4 15,828.0 11,513.5 7,743.3 3,707.0* Tariff Adjustment and Advance Against Depreciation has been netted from Sales.The Accompanying Accounting Policies and notes on accounts are an integral part of these statements.There are no Extra Ordinary items.7

Annexure IIIRESTATED STATEMENT OF CASH FLOWS(Rs. million)As at 31 stAs at March 31,Dec 2009 2009 2008 2007 2006 2005A. CASH FLOW FROM OPERATING ACTIVITIESNet Profit Before Tax, Prior Period Adjustments 9,344.8 10,025.5 8,178.0 7,692.5 6,520.3 6,141.8and Extra Ordinary ItemsAdjustment for:Advance Against Depreciation - 2,002.4 2,002.4 1,962.1 1,987.9 538.7Depreciation 3,259.9 2,342.3 2,399.2 2,456.1 2,325.6 2,182.8Interest & Finance Charges 1,396.2 2,205.5 2,546.9 3,229.8 3,415.3 4,075.4Exchange rate variation/Fluctuation Adjustment account - (97.1) (118.1) 52.0 (52.7) 235.0Rebate to Customers (177.7) (168.9) (213.6) (289.3) (162.9) (198.4)Debt/Stores written off - - - 0.1 0.3 -Loss on Sale of Assets - - - 0.4 0.3 -Operating Profit before Working Capital Changes 13,823.2 16,309.7 14,794.8 15,103.7 14,034.1 12,975.3Adjustment for:Trade and Other Receivables 985.0 (475.9) (661.3) 5,070.6 (4,246.7) (3,212.7)Inventories (53.0) (22.2) 50.8 38.4 (288.3) 564.1Trade Payables and Other Liabilities (876.4) (451.8) 2,060.9 30.0 637.4 (239.9)Provisions 173.0 91.8 1,632.7 892.6 1,855.6 286.4Loans and Advances (136.2) 2,994.9 (108.7) (1,258.5) (2,122.2) (1,229.5)Other Current Assets 423.9 (490.2) (106.7) (195.0) (1.3) 31.120.1 1,646.6 2,867.7 4,578.1 (4,165.5) (3,800.5)Cash generated from operations 14,339.5 17,956.3 17,662.5 19,681.8 9,868.6 9,174.8Taxes paid (1,449.7) (2,664.6) (1,203.9) (934.3) (453.9) (254.2)Net cash flow from Operating Activities-A 12,889.8 15,291.7 16,458.6 18,747.5 9,414.7 8,920.6B. CASH FLOW FROM INVESTING ACTIVITIESNet Expenditure on Fixed Assets & CWIP, Advance forCapital Works & Construction Stores/Spares etc.(2,562.7) (6,247.0) (4,602.4) (2,560.8) (1,523.7) (882.4)Net cash used in Investing Activities – B (2,562.7) (6,247.0) (4,602.4) (2,560.8) (1,523.7) (882.4)C. CASH FLOW FROM FINANCING ACTIVITIESShare Capital including share application moneypending allotment167.0 - - - - 633.0Repayment of Long Term Borrowings (5,110.0) (4,752.4) (5,735.6) (5,791.2) (5,489.7) (2,481.2)Interest & Finance Charges Paid (1,218.5) (1,939.5) (2,215.2) (2,940.5) (3,252.4) (3,877.0)Proceeds from Borrowings 1,384.4 5,976.0 380.7 - - 675.1Dividend (2,900.0) (2,180.0) (3,043.3) (2,261.0) (1,090.2) (341.4)Tax on Dividend (492.9) (370.4) (517.2) (317.1) (152.9) (45.2)Net Cash flow from Financing Activities – C (8,170.0) (3,266.3) (11,130.6) (11,309.8) (9,985.2) (5,436.7)Net Increase/Decrease in Cash and Cash equivalents(A+B+C)2,157.1 5,778.4 725.6 4,876.9 (2,094.2) 2,601.5Cash and cash equivalents (Opening balance) 12,714.4 6,936.0 6,210.4 1,333.5 3,427.7 826.2Cash and cash equivalents (Closing balance) 14,871.5 12,714.4 6,936.0 6,210.4 1,333.5 3,427.7Notes:1. Cash and cash equivalents consist of cash in hand and bank balances.2. The Previous year’s figures have been regrouped/re-arranged/re-casted wherever necessary.The Accompanying Accounting Policies and notes on accounts are an integral part of these statements.3.8

The following table summarizes details of the Offer.THE OFFEROffer for Sale:415,000,000 Equity SharesOf whichEmployee Reservation Portion *Net Offer (Offer for Sale less the Employee Reservation Portion)3,350,000 Equity Shares411,650,000 Equity SharesOf which:A. QIB Portion: At least 246,990,000 Equity SharesOf which:a. Mutual Fund Portion 12,349,500 Equity Shares (1)b. Balance for all QIBs including Mutual Funds 234,640,500 Equity Shares (1)B. Non-Institutional Portion: Not less than 41,165,000 Equity SharesRetail Portion:Not less than 123,495,000 Equity Shares______________________.* The order of the Department of Disinvestment, Ministry of Finance bearing no. 4(7)/ 2008- DD- II dated April 14 2010 provides forthe reservation of 3,350,000 Equity Shares for Eligible Employees of our Company Any unsubscribed portion in the EmployeeReservation Portion shall be added back to the Net Offer. In case of under-subscription in the Net Offer, spill-over to the extent ofunder-subscription shall be permitted from the Employee Reservation Portion to the Net Offer.(1) Allocation shall be made on a proportionate basis. Under-subscription, if any, in any category, except the QIB Portion, would beallowed to be met with spill-over from any other category or combination of categories at the discretion of our Company and theSelling Shareholder, in consultation with the BRLMs and the Designated Stock Exchange. 5% of the QIB Portion shall be available forallocation to Mutual Funds. Mutual Funds participating in the 5% reservation in the QIB Portion will also be eligible for allocation inthe remaining QIB Portion. If at least 60% of the Net Offer cannot be allotted to QIBs, then the entire application money will berefundedThe Selling Shareholder in consultation with the BRLMS may decide to offer discount of Rs.[•] to the Offer Price determined pursuant tothe completion of the Book Building Process to the Eligible Employees and Retail Individual Bidders9

GENERAL INFORMATIONOur Company was incorporated on May 24, 1988 under the Companies Act with the RoC.For further details in changes in our name and status, see section titled “History and Certain Other CorporateMatters” on page 99.Registered and Corporate Office of our CompanySJVN LimitedHimfed BuildingNew Shimla171 009Himachal PradeshTel: +91 177 267 0064Fax: +91 177 267 0542E-mail: investor.relations@sjvn.nic.inWebsite: www.sjvn.nic.in.Company identification number: U40101HP1988GOI008409Address of the Registrar of CompaniesOur Company is registered at the office of:The Registrar of Companies Punjab, Himachal Pradesh and ChandigarhCorporate Bhawan,Plot No.4 B, Sector 27 B,Madhya Marg,Chandigarh 160 019Phone: +91 172 263 9415 and 263 9416Fax: +91 172 263 9416Email: roc.chandigarh@mca.gov.inBoard of DirectorsThe following table sets out the current composition of our Board as on the date of the filing of this Red HerringProspectus:NameDesignation and DINAge(years)Address Term Date of AppointmentMr. Hemant Kumar SharmaChairman & Managing DirectorDIN: 0003071656 Dhariwal House,Ram Nagar,Shimla – 171 0045 years or date ofsuperannuationwhichever is earlierJuly 18, 2005Mr. Rajinder Singh KatochDirector (Personnel)DIN: 0082271459 D-2/2223Vasant KunjNew Delhi – 110 0705 years or date ofsuperannuationwhichever is earlierSeptember 25, 2006Mr. Raghunath Prasad SinghDirector (Electrical)DIN: 0189404155 Block - C, Flat No. 493Divyajyoti Apartment,Sector – 19, Rohini,New Delhi – 110 0855 Years or date ofsuperannuationwhichever is earlierNovember 1, 2007Mr. Sudhir KumarNon Executive Director - GOINomineeDIN: 02669103Mr. Deepak SananNon Executive Director - GoHPNomineeDIN: 0283022554 T-6/41, Railway OfficersEnclave,San Martin Marg,Chanakyapuri,New Delhi – 110 02153 House No. 10, Type – VKasumpati,Shimla - 171009No term specified September 29, 2009No term specified April 8, 201010

NameDesignation and DINAge(years)Address Term Date of AppointmentMr. Kamaljit Singh GillIndependent DirectorDIN: 0219690364 73-A, Sahibjada Ajit SinghRoad, Nagar MithapurRoad, PO Model Town,Jalandhar City (Punjab) –144 0033 years, with effect fromthe date of assumption ofthe charge of the post oruntil further orders,whichever is earlierMay 13, 2008Mr. S.M. LodhaIndependent DirectorDIN: 0074218559 5, PanharWorli Sea FaceMumbai – 400 0183 years, with effect fromthe date of assumption ofthe charge of the post oruntil further orders,whichever is earlierMay 9, 2008Mr. Kambhampati SubramanyaSarmaIndependent DirectorDIN: 0150578766 8-2-677/B/1,Road No. 12, BanjaraHills,Hyderabad – 500 0343 years, with effect fromthe date of assumption ofthe charge of the post oruntil further orders,whichever is earlierMay 2, 2008Mr Ravi DhingraIndependent Director61 31, Munirka Vihar, NewDelhi - 673 years, with effect fromthe date of assumption ofthe charge of the post oruntil further orders,whichever is earlierMarch 29, 2010Ms Bharti PrasadIndependent Director60 C – 307, Hum SubApartments,Plot No. 14, Sector 4,Dwarka,New Delhi110 0753 years, with effect fromthe date of assumption ofthe charge of the post oruntil further orders,whichever is earlierMarch 29, 2010For details of our Directors, see section titled “Our Management” on page 104.Company Secretary and Compliance OfficerMr. P.S.R MurthySJVN LimitedHimfed BuildingNew Shimla -171 009Himachal PradeshTel: +91 177 267 0741Fax: +91 177 267 0542Email: psr.murthy@sjvn.nic.inInvestors may contact our Company Secretary and Compliance Officer in case of any Offer-related problemssuch as non-receipt of letters of allotment, credit of allotted shares in the respective beneficiary account orrefund orders, etc.All grievances relating to the ASBA process may be addressed to the Registrar to the Offer, with a copy to theSCSBs, giving full details such as name, address of the applicant, number of Equity Shares applied for, BidAmount blocked, ASBA Account number and the Designated Branch of the SCSBs where the ASBA Form wassubmitted by the ASBA Bidders.For all Offer-related queries and for redressal of complaints, investors may also write to the Book Running LeadManagers. All complaints, queries or comments received by SEBI shall be forwarded to the Book RunningLead Managers, who will be responsible for responding to such matters.Book Running Lead ManagersJM FINANCIAL CONSULTANTS PRIVATE LIMITED141, Maker Chambers IIINariman Point11

Mumbai 400 021, IndiaTel: +91 22 6630 3030Fax: +91 22 2204 7185E-mail: sjvnipo@jmfinancial.inInvestor Grievance ID: grievance.ibd@jmfinancial.inWebsite: www.jmfinancial.inContact Person: Lakshmi LakshmananSEBI registration No.: INM000010361IDFC Capital LimitedNaman Chambers, C 32 G Block,Bandra Kurla ComplexBandra (East)Mumbai - 400 051, IndiaTel: +91 22 6622 2600Fax: +91 22 6622 2501E-mail: sjvnl.ipo@idfcsski.comInvestor Grievance E-mail: complaints@idfcsski.comWebsite: www.idfcsski.comContact Person: Mr. Hiren RaipancholiaSEBI registration number: INM000011336IDBI Capital Market Services Limited5th Floor, Mafatlal Centre,Nariman Point,Mumbai 400 021Tel : +91 22 4322 1212(B)Fax: +91 22 2285 0785Email: sjvn.ipo@idbicapital.comInvestors Grievance id: redressal@idbicapital.comWebsite: www.idbicapital.comContact Person : Mr. Hemant Bothra/ Mr Kartik ShahSEBI registration No: INM000010866SBI Capital Markets Limited202, Maker Tower 'E', Cuffe ParadeMumbai 400 005Tel: +91 22 2217 8300Fax.: +91 22 2218 8332E-Mail: sjvn.ipo@sbicaps.comInvestor Grievance ID: investor.relations@sbicaps.comWebsite: www.sbicaps.comContact Person: Ms. Nidhi Jain / Mr. Anurag PandeySEBI registration No: INM000003531Domestic Legal Advisors to our CompanyFox Mandal & Co.FM HouseA- 9 Sector-9NOIDA- 201301NCR of DelhiTel: +91 120 430 5555Fax.: +91 120 2542 222Domestic Legal Advisors to the UnderwritersAZB & PartnersPlot No. A8, Sector 4Noida 201 301, India12

Tel: +91 120 417 9999Fax.: +91 120 417 9900International Legal CounselK&L Gates LLPOne Raffles QuayLevel #19-01, North TowerSingapore 048583Tel: +65 6507 8100Fax: +65 6507 8111Syndicate MembersJM FINANCIAL SERVICES PRIVATE LIMITEDApeejay House, 3, Dinshaw Waccha Road, Churchgate,Mumbai 400 021Tel: +91 22 6704 3184/85Fax.: +91 22 6654 1511E-Mail: deepak.vaidya@jmfinancial.in, tn.kumar@jmfinancial.inWebsite: www.jmfinancial.inContact Person: Deepak Vaidya and T.N. KumarSEBI Registration No.: BSE INB/F011054831, NSE INB/F231054835IDBI Capital Market Services Limited5th Floor, Mafatlal Centre,Nariman Point,Mumbai 400 021Tel : +91 22 4322 1212(B)Fax: +91 22 2285 0785Email: sjvn.ipo@idbicapital.comInvestors Grievance id: redressal@idbicapital.comWebsite: www.idbicapital.comContact Person : Mr. Hemant Bothra/ Mr Kartik ShahSEBI registration No: INM000010866SHAREKHAN LIMITEDA-206, Phoenix House, Phoenix Mills Compound, Senapati Bapat Marg,Lower Parel, Mumbai – 400 013Tel: +91 22 6748 2000Fax.: +91 22 2498 2626E-Mail: pankajp@sharekhan.comWebsite: www.sharekhan.comContact Person: Pankaj PatelSEBI Registration No.: BSE INB011073351, NSE INB231073330SBICAP SECURITIES LIMITED191, Maker Tower F, Cuffe Parade,Mumbai 400 005Tel: +91 22 3027 3309Fax.: +91 22 3027 3402E-Mail: prasad.chitnis@sbicapsec.comWebsite: www.sbicapsec.comContact Person: Prasad ChitnisSEBI Registration No.: BSE INB01105303, NSE INB231052938Self Certified Syndicate Banks13

The list of banks that have been approved by SEBI to act as SCSBs in respect of the ASBA Process are set forthin http://www.sebi.gov.in/pmd/scsb.pdf. For details on Designated Branches of SCSBs collecting the ASBA Bidcum Application Form, please refer to the above mentioned SEBI link.Bankers to our CompanySl. No. Name of Bank Particulars1. Axis Bank Limited 2A and B, Khan Market, New Delhi- 110003Tel: +91 11 4175 7345Fax: +91 11 2469 9371Email ID: khanmarketbranchhead@axisbank.comWebsite: www.axisbank.com2. IDBI Bank Limited Unit No. 2, Corporate ParkSion Trombay RoadChembur- Mumbai- 400 071Tel: +91 22 6690 8402Fax: +91 22 2528 6173Email ID: mn.kamat@idbi.co.inWebsite: www.idbi.com3. IndusInd Bank Ltd. M-56 Greater Kailash II, New Delhi- 110048Tel: +91 11 2921 6539Fax: +91 11 2921 6537Email ID: denp@indusind.comWebsite: www.indusind.com4. Jammu and Kashmir BankLimited5. Oriental Bank of CommerceLimitedG-40, Connaught Place, New Delhi- 110001Tel: +91 11 2335 2098Fax: +91 11 2335 2103Email ID: circus@jkbmail.comWebsite: www.jkbank.netE Block, Connaught Place, New Delhi- 110001Tel: +91 11 4765 1186Email ID: bm1297@obc.co.inWebsite: www.obcindia.co.in6. Yes Bank Limited 2nd Floor, Tiecicon House, Dr. E. Moses RoadMahalaxmi, Mumbai- 400 011Tel: +91 22 6622 9031Fax: +91 22 2497 4875Email ID: dlbtiservices@yesbank.inWebsite: www.yesbank.in7. Dena Bank 3 Mangal Bhawan, Aryasamaj RoadKarol Bagh, New Delhi- 110 005Tel: +91 11 2875 4099/ 2406Fax: +91 11 2875 3195Email ID: karolb@denabank.co.inWebsite: www.denabank.com8. Punjab National Bank D-9 Lane 1, Sector 1New Shimla- 171 009 (HP)Tel: +91 17 7267 0443Fax: + 91 17 7267 0443Email ID: bo450000@pnb.co.inWebsite: www.pnb.com9. HDFC Bank Limited FIG-OPS Department, HDFC Bank LimitedLodha-I Think Techno CampusO-3 Level, Next to Khanjurmarg Railway StationKhanjurmarg (East), Mumbai- 400 042Tel: +91 22 3027 2928Fax: +91 22 2579 9801Email: deepak.rane@hdfcbank.comWebsite: www.hdfcbank.comRegistrar to the OfferLink Intime India Private LimitedC-13, Pannalal Silk Mills Compound,L.B.S. Marg, Bhandup (West)14

Mumbai 400 078Telephone No.: +91 22 2596 0320Fax No.: +91 22 2596 0329Email ID: sjvnl.ipo@linkintime.co.inWebsite: www.linkintime.co.inContact Person: Mr. Vishwas AttavarSEBI Registration No.: INR000004058Bankers to the Offer/ Escrow Collection BanksSNo.NameParticulars1 Axis Bank Limited 2A and B, Khan Market, New Delhi- 110003Tel: +91 11 4175 7345Fax: +91 11 2469 9371Email ID: khanmarketbranchhead@axisbank.comWebsite: www.axisbank.comContact Person: Mr Sanjay MalhotraSEBI Registration No: INB1000000172 HDFC Bank Limited FIG-OPS Department, HDFC Bank LimitedLodha-I Think Techno CampusO-3 Level, Next to Khanjurmarg Railway StationKhanjurmarg (East), Mumbai- 400 042Tel: +91 22 3027 2928Fax: +91 22 2579 9801Email: deepak.rane@hdfcbank.comWebsite: www.hdfcbank.comContact Person: Deepak RaneSEBI Registration No: INB1000000633 State Bank of India Capital Market BranchMumbai Main Branch BuildingMumbai Samachar Marg, Fort, Mumbai- 400023Tel: +91 22 2266 2133Fax: +91 22 2266 4959Email ID: sbi.11777@sbi.co.inWebsite: www.statebankofindia.comContact Person: Surekha ShindeSEBI Registration No: INB1000000384 Kotak Mahindra BankLimited5 The Hong Kong and ShanghaiBanking Corporation Limited5 th Floor, Dani Corporate Park 158, CST Road, Santacruz (E) Mumbai- 400098Tel: +91 22 6759 5336Fax: +91 22 6759 5374Email ID: amit.kr@kotak.comWebsite: www.kotak.comContact Person: Amit KumarSEBI Registration No: INB100000927HSBC Securities Services Department, Shiv Building 2 nd Floor, Plot No 139-140 B WesternExpress Highway, Sahar Road Junction, Vile Parle (East), Mumbai- 400057, Maharashtra, IndiaTel: +91 98217 80250Fax: +91 22 4035 7657Email ID: mustafasanchawalla@hsbc.co.inWebsite: www.hsbc.co.inContact Person: Mustafa SanchawallaSEBI Registration No: INB1000000276 ICICI Bank Limited Capital Markets GroupNo. 30 Mumbai Samachar Marg, Fort, Mumbai- 400001Tel: +91 95601 93261Fax: +91 22 2261 1138Email ID: sidhartha.routray@icicibank.comWebsite: www.icicibank.comContact Person: Sidhartha RoutraySEBI Registration No: INB1000000047 Yes Bank Limited 2nd Floor, Tiecicon House, Dr. E. Moses RoadMahalaxmi, Mumbai- 400 011Tel: +91 22 6622 9031Fax: +91 22 2497 4875Email ID: dlbtiservices@yesbank.inWebiste: www.yesbank.inContact Person: Mahesh ShiraliSEBI Registration No: INB10000093515

Refund BanksS No. Name Particulars1 HDFC Bank Limited FIG-OPS Department, HDFC Bank LimitedLodha-I Think Techno CampusO-3 Level, Next to Khanjurmarg Railway StationKhanjurmarg (East), Mumbai- 400 042Tel: +91 22 3027 2928Fax: +91 22 2579 9801Email: deepak.rane@hdfcbank.comWebsite: www.hdfcbank.comContact Person: Deepak Rane2 State Bank of India Capital Market BranchMumbai Main Branch BuildingMumbai Samachar Marg, Fort, Mumbai- 400023Tel: +91 22 2266 2133Fax: +91 22 2266 4959Email ID: sbi.11777@sbi.co.inWebsite: www.statebankofindia.comContact Person: Surekha Shinde3 Kotak Mahindra Bank Limited 5 th Floor, Dani Corporate Park 158, CST Road, Santacruz (E) Mumbai- 400098Tel: +91 22 6759 5336Fax: +91 22 6759 5374Email ID: amit.kr@kotak.comWebsite: www.kotak.comContact Person: Amit KumarStatutory Auditors of our CompanyHingorani M & Co., Chartered Accountants35, Netaji Subhash MargDariya Ganj, New Delhi- 110 002Tel: +91 11 4106 8129/ 4107 1344Fax: +91 11 2326 8129Email: hmc@vsnl.netContact Person: Mr. Pradeep KumarFirm Registration No: 006772NFor details of changes in Auditors, see section titled “Other Regulatory and Statutory Disclosures – Changesin Auditors” on page 171Internal Auditors of our CompanyM/s H.K. Khanna & CoB-19 Greater Kailash IINew Delhi- 110 048Tel: +91 11 2922 4628Fax: +91 11 2922 8155Email: harsh.khanna@hotmail.comContact Person: Mr. H.K. KhannaRegistration No: 000575NM/s Indra D. Narayan & Co.165, Vinoba Puri, Lajpat Nagar- IINew Delhi- 110 024Tel: +91 11 2983 2137/ 7399Fax: +91 4172 562616

Email: idnca@rediffmail.comContact Person: Indra D. NarayanRegistration No: 005630NIPO Grading AgencyCredit Analysis and Research Limited710, Suryakiran Building, 19, K.G. MargNew Delhi- 110001Tel: +91 11 2371 6199Fax: +91 11 2331 8701Email: sudhir.kumar@careratings.comContact Person : Sudhir KumarStatement of Inter se Allocation of Responsibilities for the OfferThe following table sets forth the inter se distribution of responsibility and coordination for various activities inrelation to the Offer among the BRLMs:S. No Activity ResponsibilityDesignatedCoordinating BookRunning leadManager1 Capital structuring with relative components and formalities such as type ofinstruments., etc.2 Due-diligence of our Company including operations/management/ businessplans/legal, etc. drafting and design of this Red Herring Prospectus, the RedHerring Prospectus including the memorandum containing salient features ofthe Prospectus. The Book Running Lead Managers shall ensure compliancewith stipulated requirements and completion of prescribed formalities with theStock Exchanges, the RoC and SEBI, including finalisation of Prospectus andthe RoC filingJM Financial,IDFC Capital,IDBICAPS andSBI CAPSJM Financial,IDFC Capital,IDBICAPS, SBICAPSJM FinancialJM Financial3 Drafting and approving all statutory advertisements JM Financial,IDFC Capital,IDBICAPS, SBICAPSJM Financial4 Drafting and approving non-statutory advertisements including corporateadvertisements5 Preparation and finalization of the road-show presentation and frequently askedquestions for the road-show team6 Appointment of intermediaries, viz.,i. Printer(s)ii. Registrar to the Offeriii. Advertising agencyiv. Bankers to the OfferJM Financial,IDFC Capital,IDBICAPS, SBICAPSJM Financial,IDFC Capital,IDBICAPS, SBICAPSJM Financial,IDFC Capital,IDBICAPS, SBICAPSIDBICAPSIDBICAPSi. Printer(s): JMFinancialii. Registrar to theOffer: SBI CAPSiii. Advertising agency:SBI CAPSiv. Bankers to theOffer: JM Financial17

S. No Activity ResponsibilityDesignatedCoordinating BookRunning leadManager7 Non-institutional and retail marketing of the Offer, which will cover, inter alia,• Formulating marketing strategies, preparation of publicity budget• Finalizing media and public relations strategy• Finalizing centers for holding conferences for brokers, etc.• Follow-up on distribution of publicity and Offer material includingapplication form, prospectus and deciding on the quantum of the Offermaterial• Finalizing collection centers8 International Institutional marketingInternational Institutional marketing of the Offer, which will cover, inter alia,• Institutional marketing strategy• Finalizing the list and division of investors for one to one meetings, and• Finalizing road show schedule and investor meeting schedules9 Domestic Institutional marketingDomestic Institutional marketing of the OfferFinalizing the list and division of investors for one to one meetings10 Co-ordination with Stock Exchanges for Book Building Process software,bidding terminals and mock trading11 Managing the book and finalisation of pricing in consultation with ourCompany12 Post bidding activities including management of escrow accounts, co-ordinationof allocation, finalization of basis of Allotment / weeding out of multipleapplications, intimation of allocation and dispatch of refunds to bidders, dealingwith the various agencies connected with the work such as Registrars to theOffer, Bankers to the Offer, Self Certified Syndicate Banks and the bankhandling refund business etc. The designated coordinating Book Running LeadManager shall be responsible for ensuring that the intermediaries fulfill theirfunctions and enable him to discharge this responsibility through suitableagreements with our Company.JM Financial,IDFC Capital,IDBICAPS, SBICAPSJM Financial,IDFC Capital,IDBICAPS, SBICAPSJM Financial,IDFC Capital,IDBICAPS, SBICAPSJM Financial,IDFC Capital,IDBICAPS, SBICAPSJM Financial,IDFC Capital,IDBICAPS, SBICAPSJM Financial,IDFC Capital,IDBICAPS, SBICAPSIDFC CapitalIDBICAPSJM FinancialSBI CAPSSBI CAPSSBI CAPSThe Book Running Lead Managers may appoint intermediaries or other agents to carry out any of the activitiesspecified above, subject to such BRLM retaining responsibility for ensuring that such appointees fulfil theirrespective functions and discharge the relevant responsibility through suitable agreements with our Companyand the Selling Shareholder.Credit RatingAs the Offer is of equity shares, a credit rating is not required.IPO GradingPursuant to the SEBI ICDR Regulations, the Offer has been graded by Credit Analysis and Research Limited(“CARE”), a SEBI registered credit rating agency, as 4 indicating above average fundamentals. The IPO gradeis assigned on a five point scale from 1 to 5, with IPO grade 5/5 indicating strong fundamentals and IPO grade1/5 indicating poor fundamentals. A copy of the report provided by CARE, furnishing the rationale for itsgrading is available for inspection at our Registered Office from 10 a.m. to 5 p.m. on Business Days during theBidding Period. A copy of the report, along with the rationale for the grading is also attached to this RHP asAnnexure on page 247TrusteesAs the Offer is of equity shares, the appointment of trustees is not required.18

Project AppraisalAs there is no requirement applicable to our projects which require appraisal(s) to be undertaken, none of ourprojects have been appraised.ExpertsExcept for the report of CARE in respect of the IPO Grading of the Offer (a copy of which will be annexed tothe Red Herring Prospectus as an Annexure), furnishing the rationale for its grading which will be provided tothe Designated Stock Exchange and except for the reports of the Auditors of our Company on the RestatedFinancial Statements and Statement of Tax Benefits, included in this Red Herring Prospectus, our Company hasnot obtained any expert opinions.Book Building ProcessThe Book Building Process with regard to the Offer, refers to the process of collection of Bids, on the basis ofthe Red Herring Prospectus, the Bid cum Application Form and the ASBA form within the Price Band. TheOffer Price is fixed after the Bid/Offer Closing Date.The principal parties involved in the Book Building Process are:(1) Our Company;(2) The Selling Shareholder;(3) The Book Running Lead Managers;(4) Syndicate Members who are intermediaries registered with SEBI or registered as brokers withBSE/NSE and eligible to act as underwriters. Syndicate Members are appointed by the BRLMs;(5) The Registrar to the Offer;(6) The Escrow Collection Banks; and(7) The SCSBsPursuant to the provisions of regulation 41 (2) (a) of the SEBI ICDR Regulations, the Net Offer consists of anoffer for sale of less than 10% of the issued and paid up share capital of our Company and is being madethrough a 100% Book Building Process in compliance with the provisions of Rule 19(2)(b) of the SCRR.Accordingly, pursuant to Rule 19(2) (b) of the SCRR, as the Offer is an offer of less than 25% of the post-Offercapital, the Offer shall be made through a 100% Book Building Process wherein at least 60 % of the EquityShares in the Net Offer will be Allotted on a proportionate basis to QIBs. If at least 60% of the Net Offer cannotbe Allotted to QIBs, then the entire application money will be refunded forthwith. Further, not less than 10% ofthe Net Offer will be available for allocation on a proportionate basis to Non-Institutional Bidders and not lessthan 30% of the Net Offer will be available for allocation on a proportionate basis to Retail Individual Bidders,subject to valid bids being received at or above the Offer Price. Under-subscription, if any, in any category,except the QIB Portion, would be allowed to be met with spill-over from any other category or combination ofcategories at the discretion of our Company, in consultation with the BRLMs and the Designated StockExchange.In accordance with the SEBI ICDR Regulations, QIBs bidding in the QIB Portion are not allowed towithdraw their Bid(s) after the Bid/Offer Closing Date. In addition, QIBs bidding in the QIB Portion will berequired to pay at least 10% of the Bid Amount upon submission of the Bid cum Application Form during theBidding Period and allocation to QIBs will be on a proportionate basis. For further information, see sectiontitled ‘‘Offer Procedure’’ on page 191.Each of our Company and the Selling Shareholder shall comply with SEBI ICDR Regulations and any otherancillary directions issued by SEBI for the Offer. In this regard, our Company has appointed JM Financial,IDFC Capital, IDBICAP and SBI CAPS as the BRLMs to manage the Offer and to procure subscriptions to theOffer.19

The Book Building Process is subject to change from time to time and the investors are advised to maketheir own judgment about investment through this process prior to making a Bid in the Offer.Illustration of Book Building and Price Discovery Process (Investors should note that this example is solelyfor illustrative purposes and is not specific to the Offer)Bidders can bid at any price within the Price Band. For instance, assuming a price band of Rs. 20 to Rs. 24 perEquity Share, offer size of 3,000 Equity Shares and receipt of five bids from bidders, details of which are shownin the table below, A graphical representation of the consolidated demand and price would be made available atthe bidding centres during the bidding period the illustrative book as shown below shows the demand for theshares of the Company at various prices and is collated from bids received from various investors.Bid Quantity Bid Price (Rs.) Cumulative Quantity Subscription500 24 500 16.67%1,000 23 1,500 50.00%1,500 22 3,000 100.00%2,000 21 5,000 166.67%2,500 20 7,500 250.00%The price discovery is a function of demand at various prices. The highest price at which our Company and theSelling Shareholder will be able to offer the desired number of Equity Shares is the price at which the book cutsoff, i.e., Rs. 22 in the above example. The Company and the Selling Shareholder in consultation with theBRLMs, will finalise the Offer Price at or below such cut-off price, i.e., at or below Rs. 22. All bids at or abovethe Offer price and cut-off bids are valid bids and are considered for allocation in the respective categories.Steps to be taken by a Bidder in making a Bid:• Check your eligibility for making a Bid (for further information, see section titled “Offer Procedure-Who can Bid”) on page 191);• Ensure that you have a demat account and your demat account details are correctly mentioned in theBid cum Application Form or the ASBA form, as the case may be;• Except for Bids on behalf of the Government, state governments, court-appointed officials andresidents of the state of Sikkim for Bids of all values ensure that you have mentioned your PANallotted under the I.T. Act in the Bid cum Application Form and the ASBA Bid cum Application Form(see section titled “Offer Procedure – Permanent Account Number or PAN” on page 211).• Ensure that the Bid cum Application Form or the ASBA Form is duly completed as per instructionsgiven in this Red Herring Prospectus and in the respective forms.• Ensure the correctness of your demographic details (as defined in the “Offer Procedure-BiddersDepository Account Details” on page 199 given in the Bid cum Application Form and the ASBA Bidcum Application Form, with the details recorded with your Depository Participant.• Bids by QIBs are to be submitted directly to the BRLMs.• Bids by ASBA Bidders should be submitted to the Designated Branches of the SCSBs. ASBA Biddersshould ensure that the ASBA accounts have adequate credit balances at the time of submission of theirBids to the SCSBs to ensure that the ASBA Bid cum Application Form is not rejected.Withdrawal of the OfferOur Company and the Selling Shareholder, in consultation with the BRLMs, reserve the right not to proceedwith the Offer any time after the Bid/Offer Opening Date but before the Allotment of the Equity Shares. In theevent of withdrawal of the Offer, the reasons therefore shall be disclosed in a public notice which shall bepublished within two days of the Bid/ Offer Closing Date in the English and Hindi national newspapers, inwhich the pre-Offer advertisement was published, each with wide circulation and the Stock Exchanges shall beinformed promptly. The BRLMs, through the Registrar to the Offer, shall notify the SCSBs to unblock bankaccounts of the ASBA Bidders within one day from the receipt of such notification. Further, in the event of20

withdrawal of the Offer and subsequently, plans of a further public offer by our Company, a fresh Red HerringProspectus will be submitted again for observations of SEBI.Notwithstanding the foregoing, the Offer is subject to our Company obtaining final listing and trading approvalsof the Stock Exchanges and the final RoC approval of the Prospectus after it is filed with the RoC.In terms of the SEBI ICDR Regulations, QIBs shall not be allowed to withdraw their Bids after the Bid/OfferClosing Date.Offer ProgramBidding PeriodBID OPENS ON April 29, 2010BID CLOSES ON May 3, 2010Bids and any revision in Bids will be accepted only between 10 a.m. and 5 p.m. (Indian Standard Time) duringthe Bidding Period as mentioned above at the bidding centers specified in the Bid cum Application Form or incase of Bids submitted through ASBA, the Designated Branches of the SCSBs except that on the Bid/OfferClosing Date, Bids excluding ASBA Bids shall be accepted only between 10 a.m. and 3 p.m. (IndianStandard Time) and uploaded until (i) 4.00 p.m. in case of Bids by QIB Bidders and Non-Institutional Bidders;and (ii) 5.00 pm or until such time as permitted by the Stock Exchanges in case of Bids by Retail IndividualBidders. Due to limitation of time available for uploading the Bids on the Bid/Offer Closing Date, Bidders areadvised to submit their Bids one day prior to the Bid/Offer Closing Date and, in any case, no later than 1.00 p.m.(Indian Standard Time) on the Bid/Offer Closing Date. Bidders are cautioned that in the event a large number ofBids are received on the Bid/Offer Closing Date, as is typically experienced in initial public offers, which maylead to some Bids not being uploaded due to lack of sufficient time to upload, such Bids that cannot be uploadedwill not be considered for allocation in the Offer. Each of our Company, the Selling Shareholder, the BRLMsand the Syndicate Members expressly disclaim responsibility for failure of any Bids to upload. Bids will beaccepted only on Business Days, i.e. Monday to Friday (excluding any public holiday).On the Bid/Offer Closing Date, extension of time may be granted by the Stock Exchanges only for uploadingthe Bids received for an amount upto Rs.100,000 by Retail Individual Bidders and Eligible Employees biddingunder the Employee Reservation Portion, after taking into account the total number of Bids received up to theclosure of timings for acceptance of Bid-cum Application Forms and ASBA Forms as stated herein and reportedby the BRLMs to the Stock Exchanges within half an hour of such closure.Our Company and the Selling Shareholder reserve the right to revise the Price Band during the Bidding Periodin accordance with SEBI ICDR Regulations. The cap on the Price Band shall not be more than 20% of the FloorPrice. Subject to compliance with the immediately preceding sentence, the Floor Price may move up or down tothe extent of 20% of the Floor Price originally disclosed in the Red Herring Prospectus and the Cap Price will berevised accordingly.If the Price Band is revised, the Bidding Period will be extended for three additional working days aftersuch revision, subject to the Bidding Period not exceeding a total of 10 working days. Any revision in thePrice Band and the Bidding Period, if applicable, will be notified to the Stock Exchanges, a press releasewill be issued and such revisions will also be indicated on the websites of each of the BRLMs and theterminals of the Syndicate Members.Underwriting AgreementAfter the determination of the Offer Price but prior to filing of the Prospectus with the RoC, each of ourCompany and the Selling Shareholder will enter into an Underwriting Agreement with the Underwriters for theEquity Shares proposed to be offered through the Offer. It is expected that pursuant to the terms of theUnderwriting Agreement, the BRLMs shall be responsible for bringing in the amount devolved in the event thatthe Syndicate Members do not fulfill their underwriting obligations. Pursuant to the terms of the UnderwritingAgreement, the obligations of the Underwriters will also be subject to certain conditions to closing, as specifiedtherein.21

The Underwriting Agreement is dated [●]. The Underwriters have indicated their intention to underwrite thefollowing number of Equity Shares:(This portion has been intentionally left blank and will be filled in before filing of the Prospectus with the RoC)Name, Address, telephone, fax and email of the UnderwritersIndicative Number of EquityShares to be UnderwrittenAmount Underwritten(Rs. in million)[●] [●] [●][●] [●] [●][●] [●] [●][●] [●] [●][●] [●] [●]Total [●] [●]The abovementioned is indicative and is subject to finalisation and the execution of definitive documentationafter the pricing and actual allocation.In the opinion of our Board of Directors (based on certificates dated [•] given to them by the Underwriters), theresources of each of the Underwriters are sufficient to enable them to discharge their respective underwritingobligations in full. Each of the abovementioned Underwriters are registered with SEBI under Section 12(1) ofthe SEBI Act or registered as brokers with the Stock Exchanges. Our Board of Directors, at its meeting held on[●] has accepted and entered into the Underwriting Agreement with the Underwriters.Allocation among Underwriters may not necessarily be in proportion to their underwriting commitments setforth in the table above. Notwithstanding the above table, the Underwriters shall be severally responsible forensuring payment with respect to the Equity Shares allocated to investors procured by them. In the event of anydefault, the respective Underwriters in addition to other obligations to be defined in the UnderwritingAgreement, will also be required to procure/subscribe to the extent of the defaulted amount, except in caseswhere the Allotment to QIB is less than 60% of the Net Offer, in which case the entire subscription monies willbe refunded.The Underwriting arrangements mentioned above shall not apply to subscriptions by ASBA Bidders in the Offer.22

CAPITAL STRUCTUREThe share capital of our Company as of the date of this Red Herring Prospectus, before and after the Offer, is setforth below.(Amount in Rs. except share data)A) AUTHORISED SHARE CAPITAL *Aggregate NominalValue7,000,000,000 Equity Shares of Rs. 10 each 70,000,000,000B) ISSUED, SUBSCRIBED AND PAID-UP SHARE CAPITAL BEFORE THEOFFER4,136,626,500 Equity Shares of Rs. 10 each (fully paid-up) 41,366,265,000C) PRESENT OFFER IN TERMS OF THIS RED HERRING PROSPECTUS **Aggregate Value atOffer PriceOffer for sale of 415,000,000 Equity Shares of Rs. 10 each by thePresident of India4,150,000,000 [●](i)Of whichEmployee Reservation Portion *** 3,350,000 Equity Shares are reserved forAllotment to Eligible Employees33,500,000(ii) Net Offer to Public 411,650,000 Equity Shares 4,116,500,000Of whichQIB Portion At least 246,990,000 Equity Shares 2,469,900,000Non Institutional Portion Not less than 41,165,000 Equity Shares 411,650,000Retail Portion Not less than 123,495,000 Equity Shares 1,234,950,000D) PAID UP EQUITY CAPITAL AFTER THE OFFER ****4,136,626,500 Equity Shares of Rs. 10 each 41,366,265,000E) SHARE PREMIUM ACCOUNT ****Before the Offer 131,275,000After the Offer 131,275,000*With effect from September 10, 2009, the equity shares of the face value of Rs. 1,000 each have been split into Equity Shares of the facevalue of Rs. 10 each. For details of increase in our authorised share capital see section titled “History and Certain Other CorporateMatters” on page 99** The Offer has been approved by the GoI vide revised letter dated April 13, 2010 authorizing the disinvestment of 415,000,000 equityshares of our Company aggregating approximately 10.03% of the paid-up share capital of our Company and noted by the Boardthrough its resolution dated April 13 2010. The Offer is through an Offer for Sale by the President of India, acting through the MoP, ofup to 415,000,000 Equity Shares (based on the current issued, subscribed and paid up share capital of our Company of4,136,626,500Equity Shares), such shares currently being held by President of India.*** The order of the Department of Disinvestment, Ministry of Finance bearing no. 4(7)/ 2008- DD- II dated April 14 2010 provides for thereservation of 3,350,000 Equity Shares for Eligible Employees of our Company.**** As this is an offer for sale, the issued, subscribed, paid-up share capital and the share premium account of our Company will remainunchangedIn terms of sub clause (a) of second proviso to sub-regulation 6 of regulation 26 of the SEBI Regulations, as thisis an offer for sale of equity shares of a government company engaged in the infrastructure sector, therequirement of holding equity shares by the Selling Shareholder for a period of one year as on the date of filingof the Red Herring Prospectus with SEBI, is not applicable.By way of letter bearing no. bearing no. 6\23\2010-FJU dated April 13, 2010 FIPB has clarified that its FIPBapproval is not required for the transfer of the Equity Shares to non resident investors. Further, the RBI vide itsletter dated April 15, 2010 and bearing no. FE.CO.FID.No.- /10.21.185/2009-10 has confirmed that it has noobjection to the transfer of 415,000,000 Equity Shares by the President of India, acting through the Ministry ofPower, Government of India.23

Any reference to the GoI in this section shall mean the President of India acting through the MoP and anyreference to the GoHP in this section shall mean the Governor of Himachal Pradesh.Notes to Capital Structure1. Share Capital History of our CompanyThe following is the history of the share capital of our Company:Date of allotmentNo. ofequitysharesFaceValue(Rs.)IssuePrice(Rs.)Consideration(Cash, otherthan cash etc.)Nature ofallotmentMay 24, 1988 8 1,000 1,000 Cash Subscription toMemorandum ofAssociation*June 27, 1990 1,112,092 1,000 1,000 Cash Further allotmentof sharesMay 15, 1991 500,000 1,000 1,000 Cash Further allotmentof sharesNovember 23, 1992 250,000 1,000 1,000 Cash Further allotmentof sharesDecember 19, 1992 113,800 1,000 1,000 Cash Further allotmentof sharesMay 14, 1993 400,000 1,000 1,000 Cash Further allotmentof sharesApril 19, 1994 950,000 1,000 1,000 Cash Further allotmentof sharesAugust 4, 1994 325,000 1,000 1,000 Cash Further allotmentof sharesSeptember 10, 1994 300,000 1,000 1,000 Cash Further allotmentof sharesJanuary 12, 1995 350,000 1,000 1,000 Cash Further allotmentof sharesMay 31, 1995 520,500 1,000 1,000 Cash Further allotmentof sharesSeptember 25, 1995 512,700 1,000 1,000 Cash Further allotmentof sharesJanuary 31, 1996 356,000 1,000 1,000 Cash Further allotmentof sharesNovember 12, 1996 1,131,300 1,000 1,000 Cash Further allotmentof sharesDecember 30, 1996 758,300 1,000 1,000 Cash Further allotmentof sharesJune 6, 1997 2,890,000 1,000 1,000 Cash Further allotmentof sharesNovember 4, 1997 2,683,992 1,000 1,000 Cash Further allotmentof sharesJune 10, 1998 2,079,208 1,000 1,000 Cash Further allotmentof sharesJune 10, 1998 146,900 1,000 1,000 Other than Cash Further allotmentof sharesMarch 30, 1999 4,110,000 1,000 1,000 Cash Further allotmentof sharesApril 28, 1999 50,000 1,000 1,000 Cash Further allotmentof sharesApril 29, 1999 25,000 1,000 1,000 Cash Further allotmentof sharesJune 14, 1999 717,500 1,000 1,000 Cash Further allotmentof sharesCumulative Equity Sharecapital (Rs.)8,0001,112,100,0001,612,100,0001,862,100,0001,975,900,0002,375,900,0003,325,900,0003,650,900,0003,950,900,0004,300,900,0004,821,400,0005,334,100,0005,690,100,0006,821,400,0007,579,700,00010,469,700,00013,153,692,00015,232,900,00015,379,800,00019,489,800,00019,539,800,00019,564,800,00020,282,300,00024

Date of allotmentNo. ofequitysharesFaceValue(Rs.)IssuePrice(Rs.)Consideration(Cash, otherthan cash etc.)Nature ofallotmentJuly 22, 1999 350,000 1,000 1,000 Cash Further allotmentof sharesJuly 22, 1999 23 1,000 1,000 Other than Cash Further allotmentof sharesSeptember 20, 1999 894,169 1,000 1,000 Cash Further allotmentof sharesNovember 25, 1999 327,651 1,000 1,000 Cash Further allotmentof sharesMarch 22, 2000 2,768,180 1,000 1,000 Cash Further allotmentof sharesSeptember 29, 2000 1,639,300 1,000 1,000 Cash Further allotmentof sharesApril 27, 2001 3,250,000 1,000 1,000 Cash Further allotmentof sharesSeptember 28, 2001 1,461,649 1,000 1,000 Cash Further allotmentof sharesMay 6, 2002 5,811,868 1,000 1,000 Cash Further allotmentof sharesJanuary 10, 2003 1,470,000 1,000 1,000 Cash Further allotmentof sharesJuly 25, 2003 350,000 1,000 1,000 Cash Further allotmentof sharesSeptember 26, 2003 1,200,000 1,000 1,000 Cash Further allotmentof sharesFebruary 17, 2004 450,000 1,000 1,000 Cash Further allotmentof sharesJuly 6, 2004 350,000 1,000 1,000 Cash Further allotmentof sharesDecember 2, 2004 400,000 1,000 1,000 Cash Further allotmentof sharesMarch 1, 2005 83,000 1,000 1,000 Cash Further allotmentof sharesCumulative Equity Sharecapital (Rs.)20,632,300,00020,632,323,00021,526,492,00021,854,143,00024,622,323,00026,261,623,00029,511,623,00030,973,272,00036,785,140,00038,255,140,00038,605,140,00039,805,140,00040,255,140,00040,605,140,00041,005,140,00041,088,140,000Sub division of nominal value of Equity Shares of our Company from Rs. 1, 000 per equity shares to Rs. 10 per Equity Shares with effectfrom September 10, 2009. Cumulative number of equity shares increased from 41,088,140 equity shares of Rs. 1,000 each to 4,108,814,000Equity Shares of Rs.10 eachApril 13, 2010** 27,812,500 10 14.72 Cash Preferentialallotment ofshares41,366,265,000Total 41,366,265,000* Initial allotment of two equity shares of face value Rs. 1,000 each in favour of Mr. M.M. Kohli and Mr. V.K. Khanna and one equityshare of face value Rs. 1,000 each in favour of Mr. J.C. Gupta, Mr. U.V. Bhat, Mr. Kailash Chand Mahajan and Mr. M.C. Tiwari, eachsuch individual shareholder being the nominee of President of India. Further, one equity share each of face value Rs. 1, 000 wasallotted in favour of the nominees of GoHP i.e. Mr. Kailash Chand Mahajan and Mr. M.C. Tiwari. However, these equity shares wereheld on behalf of GoI.** Pursuant to the GoI approval dated April 13, 2010, our Company has allotted 27,812,500 Equity Shares to the GoHP on April 13,2010 at a price of Rs 14.72 per equity share aggregating to Rs 409.40 million25

(2) Except as mentioned below no allotments of shares have been made by our Company for considerationother than cash:Date ofallotmentNo. of equityshares allottedFace Value(Rs.)Issue price(Rs.) Name of Allottees Reasons for the AllotmentJune 10, 1998 146,900 1,000 1,000 Governor, State ofHimachal PradeshJuly 22, 1999 23 1,000 1,000 Governor, State ofHimachal PradeshIn settlement for acquisitions ofassets of Nathpa Jhakri projectfrom Himachal Pradesh StateElectricity Board.In settlement for acquisitions ofassets of Nathpa Jhakri projectfrom Himachal Pradesh StateElectricity Board.(2) Issue of Equity Shares in the last one yearOur Company allotted 27,812,500 Equity Shares to the GoHP on April 13, 2010 at a price of Rs 14.72 perequity share pursuant to GoI order.(3) Promoters Contribution and lock-in(a)Details of the build up of the total shareholdings of our Promoters:President of IndiaDate of allotment*Consideration(cash, otherthan cash,etc)Nature ofallotmentMay 24, 1988 Cash Subscription toMemorandum**June 27, 1990 Cash Further Allotmentof sharesMay 15, 1991 Cash Further Allotmentof sharesNovember 23, 1992 Cash Further Allotmentof sharesDecember 19, 1992 Cash Further Allotmentof sharesMay 14, 1993 Cash Further Allotmentof sharesApril 19, 1994 Cash Further Allotmentof sharesAugust 4, 1994 Cash Further Allotmentof sharesSeptember 10, 1994 Cash Further Allotmentof sharesJanuary 12, 1995 Cash Further Allotmentof sharesMay 31, 1995 Cash Further Allotmentof sharesSeptember 25, 1995 Cash Further Allotmentof sharesJanuary 31, 1996 Cash Further Allotmentof sharesNovember 12, 1996 Cash Further Allotmentof sharesJune 6, 1997 Cash Further Allotmentof sharesNo. of equitysharesFace ValueIssue price perEquity Share8 1,000 1,0001,112,092 1,000 1,000400,000 1,000 1,000200,000 1,000 1,000100,000 1,000 1,000400,000 1,000 1,000600,000 1,000 1,000300,000 1,000 1,000300,000 1,000 1,000250,000 1,000 1,000520,500 1,000 1,000512,700 1,000 1,000356,000 1,000 1,0001,131,300 1,000 1,0002,370,000 1,000 1,00026

Date of allotment*Consideration(cash, otherthan cash,etc)Nature ofallotmentNovember 4, 1997 Cash Further Allotmentof sharesJune 10, 1998 Cash Further Allotmentof sharesMarch 30, 1999 Cash Further Allotmentof sharesApril 29, 1999 Cash Further Allotmentof sharesJune 14, 1999 Cash Further Allotmentof sharesJuly 22, 1999 Cash Further Allotmentof sharesSeptember 20, 1999 Cash Further Allotmentof sharesNovember 25, 1999 Cash Further Allotmentof sharesMarch 22, 2000 Cash Further Allotmentof sharesSeptember 29, 2000 Cash Further Allotmentof sharesApril 27, 2001 Cash Further Allotmentof sharesSeptember 28, 2001 Cash Further Allotmentof sharesMay 6, 2002 Cash Further Allotmentof sharesNo. of equitysharesFace ValueIssue price perEquity Share2,113,992 1,000 1,0001,086,008 1,000 1,0004,010,000 1,000 1,00025,000 1,000 1,000675,000 1,000 1,000300,000 1,000 1,000794,169 1,000 1,000227,651 1,000 1,0002,098,180 1,000 1,0001,100,000 1,000 1,0003,250,000 1,000 1,0001,461,649 1,000 1,0005,121,868 1,000 1,000Sub division of the nominal value of the equity shares of our Company from Rs. 1,000 per equity shares to Rs. 10 per Equity Sharewith effect from September 10, 2009Total 3,081,611,700* All the equity shares held by the Promoter were fully paid up at the time of their allotment.** Initial allotment of two equity shares of face value Rs. 1,000 each in favour of Mr. M.M. Kohli and Mr. V.K. Khanna and one equityshare of face value Rs. 1,000 each in favour of Mr. J.C. Gupta, Mr. U.V. Bhat, Mr. Kailash Chand Mahajan and Mr. M.C. Tiwari ,wasmade, each such individual shareholder being the nominee of the President of India.Further, one equity share each of face value Rs. 1, 000 was allotted in favour of the nominees of GoHP i.e. Mr. Kailash ChandMahajan and Mr. M.C. Tiwari. However, these equity shares were held on behalf of GoI.Governor, State of Himachal PradeshDate of allotment*Consideration(cash, otherthan cash,etc)Nature ofallotmentMay 15, 1991 Cash Further allotmentof sharesNovember 23, 1992 Cash Further allotmentof sharesDecember 19, 1992 Cash Further allotmentof sharesApril 19, 1994 Cash Further allotmentof sharesAugust 4, 1994 Cash Further allotmentof sharesJanuary 12, 1995 Cash Further allotmentof sharesNo. of equitysharesFace ValueIssue price perEquity Share100,000 1,000 1,00050,000 1,000 1,00013,800 1,000 1,000350,000 1,000 1,00025,000 1,000 1,000100,000 1,000 1,00027

Date of allotment*Consideration(cash, otherthan cash,etc)Nature ofallotmentDecember 30, 1996 Cash Further allotmentof sharesJune 6, 1997 Cash Further allotmentof sharesNovember 4, 1997 Cash Further allotmentof sharesJune 10, 1998 Cash Further allotmentof sharesJune 10, 1998Other thancashFurther allotmentof sharesMarch 30, 1999 Cash Further allotmentof sharesApril 28, 1999 Cash Further allotmentof sharesJune 14, 1999 Cash Further allotmentof sharesJuly 22, 1999 Cash Further allotmentof sharesJuly 22, 1999Other thancashFurther allotmentof sharesSeptember 20, 1999 Cash Further allotmentof sharesNovember 25, 1999 Cash Further allotmentof sharesMarch 22, 2000 Cash Further allotmentof sharesSeptember 29, 2000 Cash Further allotmentof sharesMay 6, 2002 Cash Further allotmentof sharesJanuary 10, 2003 Cash Further allotmentof sharesJuly 25, 2003 Cash Further allotmentof sharesSeptember 26, 2003 Cash Further allotmentof sharesFebruary 17, 2004 Cash Further allotmentof sharesJuly 6, 2004 Cash Further allotmentof sharesDecember 2, 2004 Cash Further allotmentof sharesMarch 1, 2005 Cash Further allotmentof sharesNo. of equitysharesFace ValueIssue price perEquity Share758,300 1,000 1,000520,000 1,000 1,000570,000 1,000 1,000993,200 1,000 1,000146,900 1,000 1,000100,000 1,000 1,00050,000 1,000 1,00042,500 1,000 1,00050,000 1,000 1,00023 1,000 1,000100,000 1,000 1,000100,000 1,000 1,000670,000 1,000 1,000539,300 1,000 1,000690,000 1,000 1,0001,470,000 1,000 1,000350,000 1,000 1,0001,200,000 1,000 1,000450,000 1,000 1,000350,000 1,000 1,000400,000 1,000 1,00083,000 1,000 1,000Sub division of the nominal value of the equity shares of our Company from Rs. 1,000 per equity shares to Rs. 10 per Equity Sharewith effect from September 10, 2009April 13, 2010**q Cash Preferentialallotment ofshares27,812,500 10 14.72Total 1,055,014,800* The equity shares held by the Promoter were fully paid up at the time of their allotment.** Pursuant to the GoI approval dated April 13, 2010, our Company has allotted 27,812,500 Equity Shares to the GoHP on April 13, 2010at a price of Rs 14.72 per equity share aggregating to Rs 409.40 million28

(b)The details of shareholdings of each of the Promoters as on the date of filing of this Red HerringProspectus:Name of the Shareholder Before the Offer After the OfferPresident of India, acting through theMoP (including nominees)No. of EquitySharesPercentage ofshareholdingNo. of EquitySharesPercentage ofshareholding3,081,611,700 74.50 2,666,611,700 64.47Governor, State of Himachal Pradesh(including nominees)1,055,014,800 25.50 1,055,014,800 25.50Public (including Eligible Employees) Nil Nil 415,000,000 10.03Total 4,136,626,500 100.00 4,136,626,500* 100.00.* As this is an offer for sale, the issued, subscribed and paid-up share capital of our Company will remain unchanged after thecompletion of the Offer.(c)Details of Promoters Contribution locked-in for three yearsPursuant to the SEBI ICDR Regulations, an aggregate of 20% of the post-offer equity share capital of ourCompany held by our Promoters is required to be locked in for a period of three years from the date ofAllotment. As this is an offer for sale, the issued, subscribed and paid-up share capital of our Company willremain unchanged after the completion of the Offer. Consequently, an aggregate of 20% of the paid-up equityshare capital of our Company held by the Promoters shall be locked in for a period of three years from the dateof Allotment in the Offer.As set forth in the table below, our Promoter, i.e. the President of India, has vide letter no. 23/24/2009-H-II(Part) dated April 13, 2010 granted its consent to include an aggregate of 827,325,300 Equity Shares of ourCompany held by it, constituting 20% of the paid up share capital of our Company, for consideration aspromoter’s contribution which shall be locked-in for a period of three years from the date of Allotment (the“Minimum Promoter Contribution”):Name of the PromoterNumber of Equity Shares % of pre-Offer capital % of post-Offer capitallocked-in pursuant to theOffer*President of India 827,325,300 20.00% 20.00%827,325,300 20.00% 20.00%* The equity shares were fully paid up on the date of allotment.All the Equity Shares held by the President of India are eligible for Minimum Promoters Contribution inaccordance with the SEBI ICDR Regulations.Our Promoters’ contribution has been brought in to the extent of not less than the specified minimum lot andfrom persons defined as promoters under the SEBI ICDR Regulations. The Equity Shares that are being lockedinare not ineligible for computation of Promoters’ contribution under regulation 33 of the SEBI ICDRRegulations. In this connection, as per regulation 33 of the SEBI ICDR Regulations, we confirm the following:• The Equity Shares offered for the minimum 20% Promoters’ contribution are not acquired during thepreceding three years for consideration other than cash and revaluation of assets or capitalisation ofintangible assets or bonus shares out of revaluation reserves or reserves without accrual of cashresources or against shares which are otherwise ineligible for computation of Promoters’ contribution;29

• The minimum Promoters’ contribution does not include any Equity Shares acquired during thepreceding one year at a price lower than the price at which Equity Shares are being offered to thepublic in the Offer;• The Equity Shares offered for the minimum 20% Promoters’ contribution were not issued to ourPromoters upon conversion of a partnership firm;• The Equity Shares held by our Promoters and offered for the minimum 20% Promoters’ contributionare not subject to any pledge; and• The minimum Promoters’ contribution does not consist of Equity Shares for which specific writtenconsent has not been obtained from the respective Promoters for inclusion of their subscription in theminimum Promoters’ contribution subject to lock-in.(d)Details of Equity Shares locked in for one yearIn terms of regulation 36 and regulation 37 of the SEBI ICDR Regulations, other than the above Equity Sharesof the President of India that shall be locked in for three years and the Equity Shares forming part of the Offer(which shall not be locked in), the entire shareholding of the President of India (including its nominees) and theGovernor, State of Himachal Pradesh (including those of their nominees) in our Company prior to the Offershall be locked-in for a period of one year from the date of Allotment in the Offer.The President of India, acting through the MoP has pursuant to letter no. 23/24/2009-H-II (Part) dated April 13,2010 agreed to comply with the above lock-in provisions of the SEBI ICDR Regulations and shall not sell,transfer, charge, pledge or otherwise encumber any locked-in Equity Shares (including Minimum PromotersContribution) till such time that the lock-in remains effective, save and except as may be permitted under theSEBI ICDR Regulations.Further the Governor of Himachal Pradesh, acting through the Department of MPP, GoHP has pursuant to letterno. MPP(F) 2-61/2002 dated April 13, 2010 has agreed to comply with the one-year lock-in provision of theSEBI ICDR Regulations and shall not sell, transfer, charge, pledge or otherwise encumber any locked-in EquityShares till such time that the lock-in remains effective, save and except as may be permitted under the SEBIICDR Regulations.(e)Other requirements in respect of lock-inPursuant to regulation 39 read with regulation 36 (b) of the SEBI ICDR Regulations, locked-in Equity Sharesheld by our Promoters, as specified above, may be pledged to banks or financial institutions as collateralsecurity for loans granted by such banks or financial institutions, provided that the pledge of the Equity Shares isone of the terms of the sanction of the loan.Pursuant to regulation 40 of the SEBI ICDR Regulations, Equity Shares held by our Promoters may betransferred inter se or to new promoters or any person of the promoter group or persons in control of ourCompany subject to continuation of the lock-in in the hands of such transferees for the remaining period andcompliance with the Takeover Code, as applicable.Pursuant to regulation 40 of the SEBI ICDR Regulations, the Equity Shares held by persons other than ourPromoters which are locked-in as per regulation 37 of the SEBI ICDR Regulations may be transferred to anyother person holding Equity Shares which are locked-in, subject to the continuation of the lock-in in the handsof such transferees for the remaining period and compliance with the Takeover Code.4. Shareholding pattern of the Company(a)The shareholding pattern of the Company before the Offer is set forth below as per Clause 35 of theListing Agreement:CategoryCodeCategory of ShareholdersNumber ofShareholdersTotalNumber ofsharesNumber ofShares Held indematerializedformTotal Shareholding as apercentage of totalnumber of sharesShares Pledged or otherwiseencumbered30

As apercentage ofA+BAs apercentageA+B+CNumber ofsharesAs a percentage(I) (II) (III) (IV) (V) (VI) (VII) (VIII) (IX)=(VIII)/(IV)*100(A) Shareholding of Promoter and PromoterGroup1 Indiana Individuals/Hindu0 0 0 0.00 0.00 0 0.00Undivided Familyb Central Government/State2 4,136,626,500 0 100.00 100.00 0 0.00Governmentc Bodies Corporate 0 0 0 0.00 0.00 0 0.00d Financial Institutions/Banks 0 0 0 0.00 0.00 0 0.00e Any Other (specify) 0 0 0 0.00 0.00 0 0.00Sub-Total (A) (1) 2 4,136,626,500 0 100.00 100.00 0 0.002 ForeignA Individuals(Non-Resident0 0 0 0.00 0.00 0 0.00Individuals)B Bodies Corporate i.e. OCBs 0 0 0 0.00 0.00 0 0.00C Institutions 0 0 0 0.00 0.00 0 0.00D Any Other (specify) 0.00 0.00 0 0.00Sub-Total (A) (2) 0 0 0 0.00 0.00 0 0.00Total Shareholding of2 4,136,626,500 0 100.00 100.00 0 0.00Promoter and PromoterGroup (A)(1)+(A)(2)(B) Public Shareholding1 InstitutionsA Mutual Funds/UTI 0 0 0 0.00 0.00 0 0b Financial Institutions/Banks 0 0 0 0.00 0.00 0 0c Central Government/State0 0 0 0.00 0.00 0 0Government(s)d Venture Capital Fund 0 0 0 0.00 0.00 0 0e Insurance Companies 0 0 0 0.00 0.00 0 0f Foreign Institutional0 0 0 0.00 0.00 0 0Investorsg Foreign Venture Capital0 0 0 0.00 0.00 0 0Investorsh Any Other (specify) 0 0 0 0.00 0.00 0 0Sub-Total (B) (1) 0 0 0 0.00 0.00 0 02 Non-Institutions 0.00 0.00 0 0a Bodies Corporate 0 0 0 0.00 0.00 0 0b Individuals 0 0 0 0.00 0.00 0 0I Individual Shareholders0 0 0 0.00 0.00 0 0holding nominal ShareCapital value upto Rs.100,000II Individual Shareholders0 0 0 0.00 0.00 0 0holding nominal ShareCapital value In excess ofRs. 100,000c Any Other (specify) 0.00 0.00 0 0i Trust 0 0 0 0.00 0.00 0 0ii NRI's 0 0 0 0.00 0.00 0 0iii OCB's 0 0 0 0.00 0.00 0 0iv Foreign Nationals 0 0 0 0.00 0.00 0 0Sub-Total (B) (2) 0 0 0 0.00 0.00 0 0Total Public Shareholding0 0 0 0.00 0.00 0 0(B)= (B)(1)+(B)(2)Total (A)+(B) 2 4,136,626,500 0 100.00 100.00 0 0(C ) Share held by Custodian0 0 0 - - 0 0and against whichDepository ReceiptsGrand Total (A)+(B)+(C ) 2 4,136,626,500 0 100.00 100.00 0 0.0031

(b) Except as set forth below, none of our Directors hold any Equity Shares as on April 16, 2010:S. No. Name of Shareholder Number of Equity Before the Offer % After the Offer %**Shares held*1 Mr. Hemant Kumar Sharma 100 Negligible Negligible2 Mr. Raghunath Prasad Singh 100 Negligible Negligible3 Mr. Sudhir Kumar 100 Negligible Negligible4 Mr. Rajinder Singh Katoch 100 Negligible Negligible5 Mr. Deepak Sanan 100 Negligible Negligible* These shares are held on behalf of President of India** Assuming that the Directors do not Bid in the Offer5. The list of our top 10 shareholders and the number of the equity shares held by them is provided below:(a) Our top 10 shareholders as on the date of Red Herring Prospectus:S. No. Name of Shareholder Number of EquityShares held1 President of India, acting through theMoP 3, 081,611,000Face Value(Rs)**Shareholding %10 74.502 Governor, State of Himachal Pradesh 1,055,014,800 10 25.503 Mr. Hemant Kumar Sharma * 100 10 Negligible4 Mr. Raghunath Prasad Singh * 100 10 Negligible5 Mr. Sudhir Kumar* 100 10 Negligible6 Mr. Rajinder Singh Katoch * 100 10 Negligible7 Mr. Rakesh Jain* 100 10 Negligible8 Mr. Ajay Tyagi* 100 10 Negligible9 Mr. Deepak Sanan * 100 10 NegligibleTotal 4,136,626,500* These shares are held on behalf of President of India** The face value of equity shares of our Company was Rs. 1,000 at the time of allotment. Subsequently with effect from September 10,2009, the equity shares of Rs. 1,000 each have been split into Equity Shares of face value of Rs. 10 each.(b) Our top 10 shareholders 10 days prior to the filing of the Red Herring Prospectus:S. No. Name of Shareholder Number of EquityShares held1 President of India, acting through theMoP 3, 081,611,000Face Value(Rs)**Shareholding %10 75.002 Governor, State of Himachal Pradesh 1,027,202,300 10 25.003 Mr. Hemant Kumar Sharma * 100 10 Negligible4 Mr. Raghunath Prasad Singh * 100 10 Negligible5 Mr. Sudhir Kumar* 100 10 Negligible6 Mr. Rajinder Singh Katoch * 100 10 Negligible7 Mr. Rakesh Jain* 100 10 Negligible32

8 Mr. S.C. Negi* 100 10 Negligible9 Mr. Ajay Tyagi * 100 10 NegligibleTotal 4,108,814,000* These shares are held on behalf of President of India** The face value of equity shares of our Company was Rs. 1,000 at the time of allotment. Subsequently with effect from September 10,2009, the equity shares of Rs. 1,000 each have been split into Equity Shares of face value of Rs. 10 each.(c) Our top 10 shareholders two years prior to the date of filing of this Red Herring Prospectus:S. No. Name of Shareholder Number of EquityShares held1 President of India, acting through theMoP2 Governor, State of Himachal PradeshFace Value**(Rs.)Shareholding %30,816,109 1,000 75.0010,272,0231,000 25.003 Mr. H.K. Sharma* 2 1,000 Negligible4 Mr. R.D Prabhakar* 1 1,000 Negligible5 Mr. M. Sahoo* 1 1,000 Negligible6 Mr. R.S. Katoch 1 1,000 Negligible7 Mr. A.K. Kutty* 1 1,000 Negligible9 Mr. J.P. Negi* 1 1,000 Negligible10 Mr. Sutanu Behuria* 1 1,000 NegligibleTotal 41,088,140* These shares were held on behalf of President of India** The face value of equity shares of our Company was Rs. 1000 at the time of allotment of shares. Subsequently with effect from September10, 2009, the equity shares of Rs. 1,000 each have been split into Equity Shares of the face value of Rs. 10 each.6. Our Company, the Selling Shareholder, our Directors, the Book Running Lead Managers have notentered into any buy-back and/or standby and/or any other similar arrangements for the purchase ofEquity Shares being offered through the Offer.7. Pursuant to the GoI approval dated April 13, 2010, our Company has allotted 27,812,500 Equity Sharesto the GoHP on April 13, 2010 at a price of Rs 14.72 per equity share aggregating to Rs 409.40 million.Our Company does not presently have any intention or proposal for issue further capital whether byway of issue of bonus shares, preferential allotment, rights offer or in any other manner during theperiod commencing from submission of this Red Herring Prospectus to SEBI until our Equity Shareshave been listed.8. As on the date of the Red Herring Prospectus, our Company has not issued any Equity Shares out ofour revaluation reserves.9. The Company does not currently have any employee stock option scheme/employee stock purchasescheme for its employees and the Company does not intend to allot any Equity Shares to our employeesunder the employee stock option scheme/employee stock purchase scheme. As and when options aregranted to our employees under any such scheme, the Company will comply with the SEBI (EmployeeStock Option Scheme and Employee Stock Purchase Scheme), Guidelines, 1999.10. As on the date of the Red Herring Prospectus, there are no outstanding warrants, options or debenturesor other financial instruments issues by the Company, which would entitle the Promoter or othershareholders of the Company or any other person an option to receive Equity Shares. Further, there areno loans which are convertible into Equity Shares.11. Our Equity Shares including the Offer Shares are fully paid-up and there are no partly paid-up EquityShares as on the date of filing of this Red Herring Prospectus.33

12. For a period of six months commencing on the Offer Opening Date, we will not alter our capitalstructure by way of split or consolidation of Equity Shares or further issue of Equity Shares (includingoffers of securities convertible into or exchangeable, directly or indirectly, for our Equity Shares),whether preferential or otherwise, without obtaining the prior written consent of each of the BookRunning Lead Managers. If we enter into acquisitions or joint ventures for the purposes of ourbusiness, we may, subject to necessary approvals and consents, consider raising additional capital tofund such activities or use our Equity Shares as currency for acquisition or participation in such jointventures.13. There are certain restrictive covenants in the facility agreements entered into by our Company withcertain lenders. For details, see the section titled “Financial Indebtedness” on page 123. BNP Paribashas given its consent to the Offer through its letter dated February 17, 2010.14. Each of our Directors, Promoters and their immediate relatives have not purchased or sold anysecurities of our Company during a period of six months preceding the date of filing this Red HerringProspectus with SEBI.15. During the period of six months immediately preceding the date of filing of this Red HerringProspectus, no financing arrangements existed whereby our Promoters, our Directors and their relativesmay have financed the purchase of Equity Shares by any other person, other than in the normal courseof the business of such financing entity.16. Our Promoters will not participate in the Offer except as the Selling Shareholder.17. The Offer is being made through a 100% Book Building Process, pursuant to which at least 60% of theNet Offer shall be Allotted on a proportionate basis to QIBs. 5% of the QIB Portion shall be availablefor allocation on a proportionate basis to Mutual Funds only. The remainder of the QIB Portion shall beavailable for allocation on a proportionate basis to QIBs (including Mutual Funds), subject to validBids being received from them at or above the Offer Price. However, if the aggregate demand fromMutual Funds is less than 12,349,500 Equity Shares, the remaining Equity Shares available forallocation in the Mutual Fund Portion will be added to the QIB Portion and allocated proportionately tothe QIBs in proportion to their Bids.18. Further, not less than 10% of the Net Offer shall be available for Allotment on a proportionate basis toNon-Institutional Bidders and not less than 30% of the Net Offer shall be available for Allotment on aproportionate basis to Retail Individual Bidders, subject to valid Bids being received from them at orabove the Offer Price. 3,350,000 Equity Shares, i.e., 0.08% of our paid-up share capital, have beenreserved for Eligible Employees on a proportionate basis, subject to valid Bids being received at orabove the Offer Price.19. Any unsubscribed portion/ unallocated portion in the Employee Reservation Portion shall be added tothe Net Offer. In case of under-subscription in the Net Offer, spill-over to the extent of undersubscriptionshall be permitted from the reserved category to the Net Offer. If at least 60% of the NetOffer cannot be Allotted to QIBs, then the entire application money will be refunded. In the event thatthe aggregate demand in the QIB Portion has been met, under subscription/ unallocated portion in anyother category, if any, would be allowed to be met with spill-over from other categories or combinationof categories at the discretion of the Selling Shareholder and our Company in consultation with theBRLMs.20. A Bidder cannot bid for more than the number of Equity Shares offered through the Offer, subject tothe maximum limit of investment prescribed under relevant laws applicable to each category ofBidders.21. There shall be only one denomination of our Equity Shares, unless otherwise permitted by law.22. Our Company shall comply with such disclosure and accounting norms as may be specified by SEBIfrom time to time.23. The value of Allotment to a single Eligible Employee applying under the Employee ReservationPortion shall not exceed Rs. 100,000. For further details see sections titled "Offer Structure" and34

"Offer Procedure" on page 185 and 191, respectively.24. As on date of this Red Herring Prospectus, neither of the BRLMs nor their associates hold any EquityShares in our Company.25. The Company has paid interim dividends to the shareholders as on September 30, 2009 for the year FY2010.26. The FIPB through its letter bearing no. 6\23\2010-FJU dated April 13, 2010 has clarified that is FIPBapproval is not required for the transfer of the Equity Shares to non resident investors. Further, the RBIvide its letter dated April 15, 2010 and bearing no. FE.CO.FID.No.- /10.21.185/2009-10 has confirmedthat it has no objection to the transfer of 415,000,000 Equity Shares by the President of India, actingthrough the Ministry of Power, Government of India For further details regarding the said approval andother ancillary matters in this regard, see the section titled “Government and Other Approvals” onpage 161.35

OBJECTS OF THE OFFERThis is an offer for sale by the President of India of Equity Shares representing 10.03% of the paid up capital ofthe Company. Accordingly, our Company will not receive any proceeds from the Offer and all of the proceeds,less the expenses of the Offer shall be received by the Selling Shareholder.The purpose of the Offer is to achieve the benefits of listing on the Stock Exchanges and to carry out the transferof 415,000,000 Equity Shares by the Selling Shareholder. Listing of the Equity Shares will create liquidity in theEquity Shares through the creation of a public market for the Equity Shares in India.36

BASIS FOR OFFER PRICEThe Offer Price will be determined by our Company and the Selling Shareholder in consultation with theBRLMs on the basis of the assessment of market demand for the offered Equity Shares through a Book BuildingProcess and on the basis of certain quantitative and qualitative factors, including those set forth in this section.The face value of our Equity Shares is Rs. 10 each and the Offer Price is [●] times of the face value at the lowerend of the Price Band and [●] times the face value at the higher end of the Price Band. The EPS and NAVpresented in this section are based on the face value of Rs. 10 per equity share.Potential investors in our Equity Shares should carefully read the sections “Risk Factors” and “FinancialInformation” set forth on pages xiii and F-1 respectively.Qualitative FactorsWe believe the following strengths will allow us to successfully compete in the power sector:• Experience in hydroelectric power project development• Established track record of operational excellence• Stable revenue stream through long-term power purchase agreements with state electricity boards• Ability to capitalize on performance-based incentives under the current tariff regime• Established reputation for good corporate governance and environmental and social responsibility• Existing committed work force• Strong cash position to support project development and operationsFor detailed discussion on the above factors, see the section titled “Our Business” on page 58.Quantitative FactorsThe information presented below relating to our Company is based on the Restated Financial Statements for theyears ended March 31, 2007, 2008 and 2009 and the nine-month period ended December 31, 2009, each ofwhich was prepared in accordance with Indian GAAP. For details, see the section titled “Financial Statements”on page 1.Note: With effect from September 10, 2009, our equity shares with the face value of Rs. 1,000 each have beensplit into Equity Shares of face value of Rs.10 each. Accordingly, all accounting ratios have been calculated onpost-split basis.Some of the quantitative factors which may form the basis for computing the Offer Price are as follows:1. Earning Per Share (EPS)As per our Restated Financial Statements:Particulars Basic EPS (in Rs.) WeightYear ended March 31, 2007 1.58 1Year ended March 31, 2008 1.74 2Year ended March 31, 2009 1.85 3Weighted Average ( for complete financial year) 1.77Nine months ended December 31, 2009 (not annualized) 1.89_______Notes:1) Basic EPS has been computed by dividing net profit/(loss) after tax, by the weighted average number of Equity Shares outstanding atend of the year.37

2. Price/ Earnings (P/E) ratio in relation to Offer Price of Rs. [●] per share of Rs. 10 eacha) P/E ratio based on EPSParticularsP/E at the lower end of thePrice Band(no. of times)P/E at the higher end of thePrice Band(no. of times)P/E ratio based on EPS for the year ended March 31,[●][●]2009 of Rs. 1.85P/E based on weighted average Basic EPS of Rs. 1.77 [●] [●]c. Power Generation Industry P/Ei) Highest : 317.3ii) Lowest : 11.2iii) Industry Composite : 21.2________Source: Capital Market Volume XXV/03-Apr 05 – Apr 18, 2010, Category: Power Generation and Supply.3. Return on Net Worth (RONW) in the last three years.Return on Net Worth as per our Restated Financial Statements:Particulars RONW % WeightYear ended March 31, 2007 12.36% 1Year ended March 31, 2008 12.60% 2Year ended March 31, 2009 12.50% 3Weighted Average(for complete financial year) 12.51%Nine months ended December 31, 2009, 2009 11.47%____Note: The return on net worth has been computed by dividing Profit after Tax by Net Worth. The weighted average of Return on Net Worth(%) for these fiscal years have been computed by giving weights of 1, 2 and 3 for fiscal years ending March 31, 2007, 2008 and 2009respectively.4. Minimum Return on Total Net Worth after the Offer required to maintain pre – Offer EPS forthe year ended March 31 2009 is 11.26%*______* The Offer is an Offer for Sale by the Selling Shareholder and hence the share capital of the Company shall not change. On Apr 13, 2010,the Company has allotted 27,812,500 equity shares of Rs. 10 each to GoHP at a premium on preferential basis, pursuant to the specialresolution passed by members of the Company in its extra ordinary general meeting held on Apr 13, 2010. The Offer is an Offer for Sale bythe Selling Shareholder and hence the share capital of the Company shall not change5. Net Asset Value per Equity Share of face value Rs. 10 eacha. As of March 31, 2009, as per our Restated Financial Statements is Rs. 14.79.b. As of Nine months ended December 31, 2009, 2009, as per our Restated Financial Statements isRs. 16.45.c. After the Offer, as per our Restated Financial Statements: [●]d. Offer Price: Rs. [●]*_______* Offer Price per Share will be determined on conclusion of Book Building Process.Net Asset Value per Equity Share represents Net Worth excluding revaluation reserves/capital grant receivedagainst fixed assets, as restated divided by the number of Equity Shares outstanding at the end of the period.38

6. Comparison with Industry PeersFace ValueRONW%Book Value ason March 31, P/E MultipleName of the company(Rs) EPS (Rs) For Fiscal 2009 2009SJVN Limited 1 10 1.85 12.50 14.79 [●]Peer Group 2JP Power Ven. 10 0.60 13.60 12.80 -KSK Energy Ven. 10 1.80 5.20 66.10 137.7NHPC Ltd 10 0.80 6.10 17.90 23.5______Note: The EPS, RONW and NAV figures are based on the latest audited results for the year ended March 31, 2009 and P/E is based ontrailing twelve months (TTM) and Market data.(1) For the year ended March 31, 2009 – Based on Restated Financial Statements.(2) Source: Capital Market Volume XXV/03-Apr 05 – Apr 18, 2010, Category: Power Generation and Supply.The Offer Price of Rs. [●] has been determined by our Company in consultation with the BRLMs and on thebasis of assessment of market demand for the Equity Shares through the Book Building Process. The BRLMsbelieve that the Offer Price of Rs. [●] is justified in view of the above qualitative and quantitative parameters.Investors should read the above mentioned information along with “Risk Factors” and “Financial Statements”on pages xiii and 1, respectively, to have a more informed view.39

STATEMENT OF TAX BENEFITSToThe Board of Directors,SJVN Limited.,Himfed Building,New Shimla-171009,Himachal PradeshDear Sirs,We hereby report that the enclosed annexure sets forth the possible tax benefits which may be available to SJVNLimited (formerly Satluj Jal Vidyut Nigam Limited) (the “Company”) and to the Shareholders of the Companyunder the provisions of the Income Tax Act, 1961 and other allied direct and indirect tax laws presentlyprevailing and in force in India.The contents of this annexure are based on information, explanations and representations obtained from theCompany and are made on the basis of our understanding of the business activities and operations of theCompany and the interpretation of prevailing tax laws in force in India. Several of these benefits are subject tothe Company or its shareholders fulfilling certain conditions prescribed under applicable tax laws andinterpretations thereof. Accordingly the ability of the Company or its Shareholders to derive any such taxbenefits is subject to, among other things, the fulfillment of such conditions.The benefits discussed in the annexure are not exhaustive. The information being furnished by us is general innature and it is neither designed nor intended to be a substitute for professional tax advice. Investors are advisedto consult their own tax consultants with respect to the particular tax implication consequences arising out oftheir participation in the Offer or of owning the Equity Shares.We do not express any opinion or provide any assurance as to whether:i) the Company or its shareholders will continue to be eligible to obtain these benefits in future; orii) the conditions prescribed with respect to eligibility for the benefits have been or would continue tobe fulfilled.This report is intended solely for informational purposes for the inclusion in the Offer Documents in connectionwith the proposed initial public offering of the Company and is not to be used in, referred to or distributed forany other purpose.For Hingorani M & Co.Chartered AccountantsPradeep KumarPartnerM.No.: 085630Firm Registration No: 006772NPlace: 18.02.2010Dated: New Delhi40

STATEMENT OF POSSIBLE TAX BENEFITS AVAILABLETO THE COMPANY AND ITS SHAREHOLDERSThe tax benefits listed below are certain possible tax benefits available under prevailing tax laws and regulationsin India. Several of these benefits are dependent on the Company or its shareholders fulfilling certain conditionsas prescribed under the applicable tax laws and interpretations thereof. Accordingly, the ability of the Companyor its shareholders to derive tax benefits is dependent upon the fulfilment of such conditions.I. SPECIAL TAX BENEFITSA. To the CompanyA1. Under Central Sales Tax Act, 1956• Tax charged on inter state sales leviable under Section 6(1) of the Central Sales Tax Act, 1956does not apply to sale of electricity energy.A2. Under Customs Tariff• Pursuant to Notification No. 21/ 2002-Cus. dated March 1, 2002 as last amended by NotificationNo.21/2008-Cus. dated March 1, 2008 under the Customs Tariff of India, the goods required forsetting up of any Mega Hydel Power Project are eligible to be imported at ‘Nil’ rate of CustomDuty subject to fulfillment of certain conditions. A Mega Hydel Power Project is an inter-statehydel power plant with an installed capacity of 350MW or more, located in the States of Jammu &Kashmir, Sikkim, Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland andTripura or an inter-state hydel power plant of an installed capacity of 500MW or more located inStates other than those mentioned above.• Pursuant to Notification No. 21/2002-Cus. dated March 1, 2002 as last amended by NotificationNo. 21/2008-Cus. dated March 1, 2008 under Customs Tariff of India, power generatingcompanies are eligible to import goods required for power generation projects, including gasturbine power projects but excluding captive power plants set up by projects engaged in activitiesother than in power generation at the concessional rate of 5% ‘Basic Custom Duty’ under Chapter98 (Project Imports).A3. Under Exim Policy• Supply of goods to the power projects is eligible for ‘Deemed Export Benefits’ as available underChapter 8 of Foreign Trade Policy of India.B) To the Members of the CompanyThere are no special tax benefits available to the members of the Company.II.GENERAL TAX BENEFITSA. To the CompanyA1. Under the Income Tax Act, 1961 (IT Act)• In accordance with and subject to the condition specified in Section 80-IA of the IT Act, theCompany would be entitled to deduction of 100% of profits derived from Industrial Undertakingengaged in generation and/or transmission or distribution of power for any ten consecutiveassessment years out of fifteen years beginning from the year in which the undertaking generatespower or commences transmission or distribution of power if it begins to generate power at anytime during the period beginning on April 1, 1993 and ending on the March 31, 2010.• In accordance with and subject to the provisions of Section 35, the Company would be entitled todeduction in respect of expenditure laid out or expended on scientific research related to thebusiness.41

• By virtue of Section 10(34) of the IT Act, income earned by way of dividend income from anotherdomestic company referred to in Section 115-O of the IT Act, are exempt from tax in the hands ofthe Company.• While calculating dividend distribution tax under the provisions of Section 115-O of the IT Act, adeduction shall be allowed in respect of dividends received by a domestic company from asubsidiary company during the financial year provided the subsidiary company has paid tax onsuch dividends and the domestic company is not a subsidiary of any other company. It is furtherprovided that same amount of dividends shall not be taken into account for deduction more thanonce. For this purpose a company shall be deemed to be a subsidiary of another company if suchother company holds more than half in nominal value of the equity share capital of that othercompany.A2. Under Central Sales Tax Act, 1956• Pursuant to Section 8(3)(b) of the Central Sales Tax Act, 1956, purchases made in the course ofinter-state trade or commerce for use in the generation or distribution of electricity is eligible forconcessional rate of sales tax of 2%.B. To the Members of the CompanyB1. Under the Income Tax Act, 1961 (IT Act)1. All Members• Pursuant to Section 10(38), as inserted by Finance (No. 2) Act, 2004, income arising from atransfer of a long-term capital asset, being an equity share in the Company is exempt from tax, ifthe transaction of such sale has been entered into on or after October 1, 2004 and such transactionis subject to Securities Transaction Tax. However, long-term capital gains of a shareholder (beinga company) shall be taken into account in computing a book profits and income tax payable undersection 115JB ( MAT) of the IT Act.• Pursuant to Section 36(1)(xv), as inserted by the Finance Act, 2008, deductions shall be allowedwhile computing business income of an amount equivalent to the amount of securities transactiontax paid by the assessee in respect of taxable securities transactions entered into in the course ofbusiness during the previous year, if income arising from such taxable securities transactions isincluded in income computed under the head “Profit and gains of business or profession.”• By virtue of Section 111A of the IT Act, capital gains arising from transfer of short term capitalassets, being an equity share in the company which is subject to Securities Transaction Tax, will bechargeable to tax at 15% (in addition to applicable surcharge and education cess).2. Resident Members• By virtue of Section 10(34) of the IT Act, income earned by way of dividends from domesticcompany referred to in Section 115-O of the IT Act, is exempt from tax in the hands ofshareholders.• As per the provisions of Section 112 of the IT Act and other relevant provisions, long term capitalgains which are not covered under Section 10(38) of the Act and which arise on transfer of sharesin the Company (subject to such shares being held for a period exceeding 12 months) shall betaxed at the rate of 20% (plus applicable surcharge and education cess) after indexation asprovided in the second proviso to Section 48. However, under the proviso of Section 112(1) of theIT Act, if the tax on long term capital gains resulting on transfer of listed securities or units,calculated at the rate of 20% with indexation benefits exceeds the tax on long term gains computedat the rate of 10% without indexation benefit, then such gains without indexation benefit arechargeable to tax at a concessional rate of 10% (plus applicable surcharge and education cess).42

• As per the provisions of Section 54EC of the IT Act and subject to the conditions and to the extentspecified therein, long term capital gains arising on transfer of shares in the Company and notexempt under section 10(38) of the IT Act shall not be chargeable to tax if the capital gains areinvested in an amount of up to Rs. 50 ` within a period of six months from the date of transfer in“long term specified assets.” If only part of the capital gains is so invested, the amount which iseligible for exemption shall be proportionately reduced. However, if the said “long term specifiedasset” is transferred or converted into money within a period of three years from the date of itsacquisition the amount of capital gains exempted earlier would become chargeable to tax in suchyear.• Pursuant to the provisions of Section 54F of the IT Act and subject to the conditions and to theextent specified therein, long term capital gains arising on transfer of shares in the Company to anindividual or Hindu Undivided Family (HUF) and not exempt under section 10(38) of the IT Actshall not be chargeable to tax if the net consideration from such shares are used for purchases ofresidential property within a period of one year before, or two years after, the date on which thetransfer took place, or for construction of residential property within a period of three years afterthe date of transfer, provided that the individual or HUF should not own more than one residentialproperty (other than the new asset), on the date of the transfer of original asset. If the cost of suchresidential property is less than the net consideration, the amount which is eligible for exemptionshall be proportionally reduced. If the residential house in which the investment has been made istransferred within a period of three years from the date of its purchase or construction, the amountof capital gains tax exempted earlier would become chargeable to tax as long term capital gains inthe year in which such residential property is transferred. Similarly, if the shareholder purchaseswithin a period of two years or constructs within a period of three years after the date of transfer ofthe capital asset another residential property, the original exemption will be taxed as capital gainsin the year in which the additional residential property is acquired.3. Non resident Indians/members other than FIIs and foreign venture capital investors• By virtue of Section 10(34) of the IT Act, income earned by way of dividend income from anotherdomestic company referred to in Section 115-O of the IT Act, is exempt from tax in the hands ofthe recipients.Tax on investment income and long term capital gain• A non resident Indian (i.e. an individual being a citizen of India or person of Indian Origin) has anoption to be governed by the provisions of Chapter XIIA of the IT Act, viz. “Special ProvisionsRelating to certain Incomes of Non-Residents”. Under Section 115E read with Section 115D of theIT Act, where shares in the Company are subscribed for and paid for in convertible foreignexchange by a non resident Indian, capital gains made to the non resident Indian on transfer ofshares held for a period exceeding 12 months shall (in cases not covered under Section 10(38) ofthe IT Act) be concessionally taxed at the flat rate of 10% (plus applicable surcharge and educationcess) without indexation benefit but with protection against foreign exchange fluctuations.• As per section 90(2) of the IT Act, the provisions therein would prevail over the provisions ofapplicable tax treaties to the extent they are more beneficial to the non resident Indian. Thus, a nonresident Indian can opt to be governed by the beneficial provisions of an applicable tax treaty.Capital gains on transfer of foreign exchange assets will not be taxable in certain cases• Under provisions of Section 115F of the IT Act, long term capital gains which are not coveredunder Section 10(38) of the IT Act arising to a non resident Indian from the transfer of shares ofthe Company subscribed to and paid for in convertible foreign exchange shall be exempt from ITincome tax if the net consideration is reinvested in specified assets within six months of the date oftransfer. If only part of the net consideration is so reinvested, the amount eligible for suchexemption shall be proportionately reduced. The amount so exempted shall be chargeable to taxsubsequently, if the specified assets are transferred or converted within three years from the date oftheir acquisition.Return of Income not to be filed in certain cases43

• Under provisions of Section 115G of the IT Act, it shall not be necessary for a non- resident Indianto furnish his income returns if his only source of income is investment income or long termcapital gains or both arising out of assets acquired, purchased or subscribed in convertible foreignexchange and tax deductible at source has been deducted there from.Other provisions• Under Section 115-I of the IT Act, a non- resident Indian may elect not to be governed by theprovisions of Chapter XII-A for any assessment year by furnishing his income returns underSection 139 of the IT Act declaring therein that the provisions of the Chapter shall not apply tohim for that assessment year and if he does so the provisions of this chapter shall not apply to himand instead the other provisions of the IT Act shall apply.• Under the first proviso to Section 48 of the IT Act, in case of a non resident Indian, in computingthe capital gains arising from transfer of shares of the Company acquired in convertible foreignexchange (pursuant to exchange control regulations) protection is provided from fluctuations in thevalue of the Rupee in terms of foreign currency in which the original investment was made. Costindexation benefits will not be available in such a case.• As per the provisions of Section 112 of the IT Act and other relevant provisions therein, long termcapital gains (not covered under Section 10(38) of the IT Act) arising on transfer of shares in theCompany, subject to such shares being held for a period exceeding 12 months, shall be taxed at arate of 20% (plus applicable surcharge and education cess) after indexation as provided in thesecond proviso to Section 48 of the IT Act. However, as per the proviso to Section 112(1) of the ITAct, if the tax on long term capital gains resulting on transfer of listed securities or units,calculated at the rate of 20% with indexation benefits exceeds the tax on long term gains computedat the rate of 10% without indexation benefit, then such gains without indexation benefit arechargeable to tax at a concessional rate of 10% (plus applicable surcharge and education cess).• Pursuant to the provisions of Section 54EC of the IT Act and subject to the conditions and to theextent specified therein, long term capital gains arising on transfer of shares in the Company andnot exempt under section 10(38) of the IT Act shall not be chargeable to tax if such capital gainsare invested in an amount of up to Rs. 50 Lakh within a period of six months from the date oftransfer in “long term specified assets.” If only part of such capital gains is so invested, theexemption shall be proportionately reduced. However, if the said “long term specified assets” aretransferred or converted into money within a period of three years from the date of its acquisitionthe amount of capital gains exempted earlier would become chargeable to tax in such year.• Pursuant to the provisions of Section 54F of the IT Act and subject to the conditions and to theextent specified therein, long term capital gains arising on transfer of shares in the Company to anindividual or Hindu Undivided Family (HUF) and not exempt under section 10(38) of the IT Actshall not be taxable if the net consideration from such shares are used for purchases of residentialproperty within a period of one year before, or two years after, the date on which the transfer tookplace, or for construction of residential property within a period of three years after the date oftransfer, provided that the individual or HUF should not own more than one residential property(other than the new asset) on the date of the transfer of original asset. If the cost of such residentialproperty is less than the net consideration, the amount which is eligible for exemption shall beproportionally reduced. If the residential house in which the investment has been made istransferred within a period of three years from the date of its purchase or construction, the amountof capital gains tax exempted earlier would become chargeable to tax as long term capital gains inthe year in which such residential house is transferred. Similarly, if the shareholder purchaseswithin a period of two years or constructs within a period of three years after the date of transfer ofthe capital asset another residential property, the original exemption will be taxed as capital gainsin the year in which the additional residential property is acquired.4. Foreign Institutional Investors (FIIs)44

• By virtue of Section 10(34) of the IT Act, income earned by way of dividend income from anotherdomestic company referred to in Section 115-O therein, are exempt from tax in the hands of aninstitutional investor.• Short term capital gains or long term capital gains which are not covered under Section 10(38) ofthe IT Act realized by FIIs on sale of shares in the Company would be taxed at the following ratespursuant to Section 115AD of the IT Act.- Short term capital gains - 30%- Long term capital gains - 10%The above tax rates would be increased by applicable surcharge & education cess. The benefits ofindexation or the adjustment in respect of foreign exchange fluctuation as provided by Section 48of the IT Act are not available to an FII.• As per the provisions of Section 54EC of the IT Act and subject to the conditions and to the extentspecified therein, long term capital gains arising on transfer of shares in the Company and notexempt under section 10(38) of the IT Act shall not be chargeable to tax if such capital gains areinvested in an amount of up to Rs. 50 Lakh within a period of six months from the date of transferin “long term specified assets.” If only part of the capital gains is so invested, the exemption shallbe proportionately reduced. However, if the said “long term specified asset” is transferred orconverted into money within a period of three years from the date of its acquisition, the amount ofcapital gains exempted earlier would become chargeable to tax in such year.• As per section 90(2) of the IT Act, the provisions therein would prevail over the provisions of anapplicable tax treaty to the extent they are more beneficial to the FIIs. Thus, an FII can opt to begoverned by the beneficial provisions of an applicable tax treaty.5. Venture Capital Companies / Funds• In terms of Section 10 (23FB) of the IT Act, all Venture Capital Companies / Funds registeredwith the SEBI, subject to the conditions specified, are eligible for exemption from income tax onall income, including income from dividends.6. Mutual Funds• Pursuant to section 10(23D) of the IT Act, mutual funds registered under the Securities andExchange Board of India Act, 1992 or regulations made thereunder and such other mutual fundsset up by public sector banks or public financial institutions or authorized by the Reserve Bank ofIndia and subject to the conditions specified therein are eligible for exemption from income tax ontheir entire income, including income from investment in the shares of the company.B2. Under the Wealth Tax Act, 1957• Shares of the Company held by a shareholder will not be treated as an asset within the meaning ofSection 2 (ea) of the Wealth Tax Act, 1957, which will consequently not apply.B3. Under the Gift Tax Act, 1958Notes:• Gifts of shares of the Company made on or after October 1, 1998 are not liable to gift taxes.a) All the above benefits are pursuant to prevailing tax law as amended by the Finance Act, 2009 and willbe available only to the sole/first named shareholder in case the shares are held by joint shareholders.b) The above statement of possible direct and indirect tax benefits sets forth provisions of law in asummary manner only and is not a complete analysis or listing of all potential tax consequences of thepurchase, ownership and disposal of the Equity Shares.45

c) In view of the individual nature of tax consequences, each investor is advised to consult his/her own taxadvisor with respect to specific tax consequences of his/her participation in the Offer or investment inthe Equity Shares.d) In respect of non-residents, taxability of capital gains mentioned above shall be further subject to anybenefits available under applicable double taxation avoidance agreements, if any, between India andthe country in which the non-resident is domiciled.46

SECTION IV- ABOUT USINDUSTRY OVERVIEWThe information in this section includes, or has been extracted from, industry publications, websites, and otherpublicly available documents of governmental agencies such as the MoP, the Planning Commission of India, theCEA and the NRPC, as well as other sources such as industry publications and surveys, market research andforecasts and internal company reports and surveys. We may have reclassified such data for the purposes ofpresentation in this section. Industry sources and publications generally state that the information containedtherein has been obtained from sources generally believed to be reliable but there can be no assurance as to theaccuracy and completeness of the information. While, reasonable actions have been taken by us to ensure thatthe information is extracted accurately and in its proper context, we have not independently verified any of thedata from third parties contained in this section and in the Red Herring Prospectus.OverviewThe power industry in India has historically been characterised by energy shortages, with demand for electricityfar exceeding the supply. The continued growth of the Indian economy has accelerated the need for furtherinvestments in the power sector. The Government has identified the power sector as a focus sector, in order tosustain industrial growth. Based on a report published by the CEA (Power Scenario at a Glance, December2009), for FY 2009, demand for electricity exceeded supply by 11.0% (as compared to 9.9% in the precedingyear). The total energy shortage during this period was 85,303 MU. Similarly, India’s peak demand deficitduring this period was 12.0% or 13,124 MW.The following graph shows the difference between demand for, and supply of, energy in India between FY 2002and FY 2009:Demand and Supply of Energy in IndiaSource: CEA, Power Scenario at a Glance, December 2009.According to CEA, it is anticipated that by FY 2012, India’s peak demand for energy will be in the region ofapproximately 152,750 MW, and will have total energy requirements of 969,000 MU.47

Key Drivers for Electricity DemandWe believe that growth in demand for energy is correlated to the growth of the Indian economy and to itsgrowth in population.The following table shows the growth in real GDP and the growth in demand for energy for and as of the end ofeach period indicated:Period Real GDP Growth Growth in demand for EnergyFY2003 3.84% 4.49%FY2004 8.52% 2.43%FY2005 7.47% 5.74%FY2006 9.52% 6.83%FY2007 9.75% 9.31%FY2008 9.01% 7.06%FY2009 6.70% 4.73%Sources: CEA, Power Scenario at a Glance, December 2009 and Annual and Quarterly Estimates of GDP at Current Prices, Base Year1999-2000, (MOSPI – Ministry of Statistics & Programme Implementation).As India’s economy continues to grow, it is expected that India’s energy consumption will grow as well. A keyrisk to the continued growth of the Indian economy is inadequate power infrastructure. Growth in powerinfrastructure investment in India may be constrained without further improvements. In order to sustain a GDPgrowth rate of 8-9%, India would require additional capacity of about 66-79 GW by 2012, 152-183 GW by 2017and 271-334 GW by 2022 based on normative powers (Source: Integrated Energy Policy, Expert Committee onPower, August 2006, issued by the Planning Commission). The following table sets forth the additional totalelectricity generation capacity required by 2012, 2017 and 2022 under different GDP growth rate scenarios.AssumedGDP Growth(%)ElectricityGenerationRequired(Billion Units)ProjectedPeak Demand(GW)InstalledCapacityRequired(GW)CapacityAdditionRequired (1)(GW)By Fiscal 2012 8.0 1,097 158 220 669.0 1,167 168 233 79By Fiscal 2017 8.0 1,524 226 306 1529.0 1,687 250 337 183By Fiscal 2022 8.0 2,118 323 425 2719.0 2,438 372 488 334____________________________(1)Based on installed capacity of approximately 154 GW in India as of October 31, 2009.Source: Integrated Energy Policy, Expert Committee on Power, August 2006, issued by the Planning Commission.Since India gained independence in 1947, there has been considerable growth in the power sector, as evidencedby the growth of generation capacity from 1,362 MW at that time to 155,859 MW as of November 30, 2009(Source: Monthly Review of the Power Sector, (Executive Summary) CEA, November 2009). Based on theHydro Power Policy 2008 published by the MoP and the monthly generation report published by the CEA forNovember 2009, annual generation has grown from about 5,000 MU since India gained its independence to723,800 MU during FY2009. The following graph presents the growth of installed capacity generation in Indiasince its independence:48

Installed Capacity Generation in IndiaSource: Hydro Power Policy 2008, MoP; Monthly Review of the Power Sector, (Executive Summary), CEA, November 2009.In addition, between FY 1950 and FY 2009, India’s population increased significantly from 0.3 Bn to 1.1 Bn(Source: World Population Prospects & World Bank: World Development Indicators ), representing acompound annual growth rate, or CAGR, of approximately 2%. We believe that the increase in India’spopulation is directly correlated to increased consumption of electricity. According to CEA, per capitaconsumption of electricity has increased from 15 kWh/year in FY 1950 to 704 kWh/year in FY 2008,representing a CAGR of approximately 7%. According to CEA, per capita consumption of electricity isexpected to increase to 1,000 kWh/year by FY 2012.The following graph depicts the per capita consumption of electricity in India since FY1981:Per Capita Electricity Consumption in IndiaSource: Hydro Power Policy, MoP, 2008; Monthly Review of the Power Sector, (Executive Summary), CEA, November 2009.Electricity consumption in India is relatively low compared to the rest of the world, as evidenced by thefollowing chart published by the United Nations Development Program, which compares per capita electricityconsumption in various developed and developing countries.49

Per Capita Electricity Consumption in Developed and Developing CountriesSource: CIA World Factbook 2009.According to the CEA Monthly Review of the Power Sector published on November 30, 2009, as of November30, 2009 India had an installed generation capacity of approximately 155,859 MW. Thermal power plantspowered by coal, gas, naphtha or oil accounted for approximately 63.9% of installed generation capacity, withthe remaining installed generation capacity comprising hydroelectric power stations, nuclear power plants andrenewable energy sources, which accounted for 23.7%, 2.6% and 9.8% of installed generation capacity,respectively.According to the Hydro Power Policy 2008 published by the MoP, India is the sixth largest country in terms ofpower generation. However, overall electricity shortages in India continue to be a major concern. According toCEA, peaking shortages in India were approximately 12.0% based on peak demand requirements in FY 2009,and according to CEA publications, peaking shortages in FY 2006, 2007 and 2008 were 12.3%, 13.8% and16.6% of peak demand requirements, respectively (Source: Power Scenario at a Glance, CEA, December 2009).Structure of the Indian power sectorThe following diagram depicts the structure of the Indian power industry for generation, transmission anddistribution and consumption:Overview of Power Industry - India50

.HydroelectricityHydropower is a renewable source of energy that is more economical and less polluting and less damaging tothe environment than most other forms of energy production. Developing hydropower enhances energy securityas there is no fuel cost during the life of the project. Hydropower generation is unaffected by issues concerningfuel supply, particularly the volatile price fluctuations which affect imported fuels, and hydroelectric powerstations are capable of instantaneously starting or stopping operations and are able to accommodate variousloading alternatives. Hydroelectric power stations to improve the reliability of power systems and are ideal formeeting demand during peak times.In a hydroelectric power station, energy is harnessed from water by running it from an increased height to alower height and in the process, driving a hydro-turbine, which rotates an alternator to produce electricity.51

Generation of HydroelectricityWaterReservoirHydroTurbineAlternatorStep-upTransformerElectricity toGridRotationElectricity.The key features of a hydroelectric power station generation system are:Water reservoir. Hydropower (storage type) plants utilise a water reservoir, which provides the energy (i.e.moving water) to rotate the hydro turbine.Hydroelectric turbines. Water flow drives the turbines, making the rotors of the turbine rotate at high speeds.Alternators. Alternators are coupled to the turbines and rotate with the rotors of the turbine. The alternatorsconvert the energy generated by the rotation of the turbines’ rotors into electricity.In order to evaluate the potential energy from a potential hydroelectric power station site, generally three aspectsare considered:Head. This is the height from which the water falls through the hydropower installation. Gross head is the heightdifference between the upstream water level, where the water typically enters a pipeline, and the downstreamlevel, where the water leaves the installation. Net head is usually taken as the head across the turbine only and iscalculated by deducting losses due to pipeline friction, intake screen losses and other such reductions in energyfrom the gross head.Available flow. This is the water flow that can be directed through the turbine, which may not be the entire flowof the river since some water is usually left in the water course for environmental reasons or navigationalpurposes.Flow duration. The flow in most rivers varies with time. Hence a flow duration curve is required to estimate theamount of time that an installation can run during the year. Average flow is generally used when discussing flowduration.The principal classifications for the various types of hydroelectric development are (1) run-of-the-river schemes,storage schemes, tidal plant schemes and pumped storage schemes.Run-of-the-river schemes. In this type of scheme, electricity is generated from the water flow of a river or othermoving water source. This type of project generally has no reservoir to store water inflow from the catchmentarea, however, storage ponds may be constructed to divert water in a run-of-the-river scheme. These storageponds do not have an impact on the flow of the water source. Storage ponds on run-of-the-river schemes, or“run-of-the-river with pondage” schemes, are used to mitigate the impact of short-term variations in the waterflow.Storage schemes. These schemes include a reservoir where seasonal surplus of water in excess of demand isstored for generating electricity in seasons of lower flows when demand exceeds inflow. In a storage schemethere is much greater flexibility for modulation of inflows. It can have annual or even carry-over capacity fromone year to the next.52

Tidal plant schemes. In a tidal plant scheme, power is generated by virtue of the daily differences in tidal levels.The tidal range, or amplitude, is given by the difference between the high tide level and the subsequent low tidelevel. The tidal range is not constant even at one site but fluctuates to a smaller or larger extent around a localmean value depending on geographical position.Pumped storage schemes. In these schemes, water generates power during peak demand, while the same wateris pumped back in the reservoir during lean demand period. A pumped storage plant operates on the principlethat the same machines are used for generation of power during peak hours when power is given to the networkand for pumping back water into the reservoir during off peak hours, utilising power from the system. Theprovision is based on economics of operation and the availability of enough spare capacity in the grid to operatethe machines as pumps in the low load period.Hydropower Potential in IndiaAccording to the Hydro Power Policy 2008 published by the MoP, India has enormous potential forhydroelectric generation. Based on information published by the CEA, India has the potential to generateapproximately 84,044 MW through hydroelectric stations at a 60% load factor, which translates to 148,700 MWin terms of installed capacity. In addition to the above, approximately 6,782 MW of installed capacity has beenprojected to come from small, mini and micro-hydroelectric schemes, which are hydroelectric schemes withinstalled capacities of 25 MW or less. In FY 2009, these small scale hydropower generators were classified asRenewable Energy Sources (“RES”) (along with wind energy and biomass energy generation) by PlanningCommission .According to information published by the India Investment Centre, 56 potential pumped storage sites, with anaggregate installed capacity of approximately 94,000 MW have been identified.The estimated hydropower potential and probable installed capacities of the major Indian river systems aregiven below:Basin/River Potential at 60% Load Factor Probable Installed Capacity (MW)Indus 19,988 33,832Ganga 10,715 20,711Central Indian Rivers 2,740 4,152West-Flowing Rivers 6,149 9,430East-Flowing Rivers 9,532 14,511Brahmaputra 34,920 66,065Total 84,044 148,701Source: Hydro Power Policy 2008, MoP.According to CEA, as at November 30, 2009, the installed generating capacity of all hydroelectric powerprojects in India (including pumped storage schemes but excluding hydroelectric power projects located inBhutan and small, mini or micro-hydroelectric power projects) is approximately 36,885 MW.As of November 30, 2009, according to information published by the CEA, aggregate installed capacity in Indiawas approximately 155,859 MW, of which 36,995 MW was attributable to hydroelectric power schemes,representing 23.7% of aggregate installed capacity. The following table sets forth the breakdown of aggregateinstalled capacity in India as of November 30, 2009:Installed CapacityType of station MW Percentage (%)Thermal power 99,628 63.92Hydroelectric power 36,885 23.67Renewable energy sources 15,225 9.77Nuclear power 4,120 2.64Total 155,859 100.00Source: Power Scenario at a Glance, CEA, December 2009.53

Government plan for the development of the Indian power and hydroelectric sectorsIn order to meet the growing demand and minimize shortages encountered in various regions, the Governmenthas projected that aggregate generation capacity in India will need to be doubled over the next 10 years. TheGovernment has historically adopted a system of announcing successive five-year growth plans known as FiveYear Plans, that set out Government targets for economic development in various sectors, including the powersector. Each Five Year Plan has increased projected targets for additional capacity for power generation.Despite the benefits of hydroelectric projects, the share of electricity generated by hydroelectric power schemesin India has steadily declined over the years, from 37% of total installed capacity in India at the end of the 1 stFive Year Plan (1951 to 1956) to 23.67% in the current 11 th Five Year Plan, although it rose to an aggregate ofmore than 45% by 1963 and continued to represent more than 40% of aggregate installed capacity in India untilthe late 1970s, before declining to the present levels commencing in the 1980s. 40% of aggregate installedcapacity is considered by Ministry of Power to be the ideal hydro-thermal generation mix for meeting demand inan efficient manner. The table below sets forth certain information relating to installed capacity arising orprojected to arise from hydroelectric power schemes from the beginning of the 1 st Five Year Plan in 1951:Installed capacity(hydroelectricpower)Aggregateinstalledcapacity (1)Percentage oftotal installedcapacity (%)Capacity additionPlan Periodduring period1 st Plan (1951-56) 380.19 1,061.44 2,886.14 36.782 nd Plan (1956-61) 977.18 1,916.66 4,653.05 41.193 rd Plan (1961-66) 2,207.08 4,123.74 9,027.02 45.683 Annual plans (1966-69) 1,783.17 5,906.91 12,957.27 45.584 th Plan (1969-74) 1,058.39 6,965.30 16,663.56 41.805 th Plan (1974-79) 3,867.77 10,833.07 26,680.06 40.60Annual Plan (1979-80) 550.90 11,383.97 28,447.83 40.016 th Plan (1980-85) 3,076.05 14,460.02 42,584.72 33.967 th Plan (1985-90) 3,828.41 18,307.63 63,636.34 28.772 Annual Plans (1990-92) 881.50 19,194.62 69,065.39 27.798 th Plan (1992-97) 2,427.65 21,644.80 85,019.31 25.469 th Plan (1997-02) 4,538.25 26,261.23 103,410.04 25.4010 th Plan (2002-07) 7,886.00 34,653.77 (1) 132,329.21 26.19Sources: Hydro Power Policy 2008, MoP; Monthly Review of the Power Sector, November 2009, CEA.Notes:(1) Includes renewable energy source schemes, such as small or microhydroelectric power schemes.(2) Includes 1,168 MW of small hydropower capacity which was later transferred to the RES category in the year 2007-08.As a result of the decreasing share of hydropower, thermal generation, which should ideally be used only forbase load operations, is increasingly being used to meet peak requirements, which leads to sub-optimalutilisation of economic and non-renewable resources]. (Source: Hydro Power Policy, 2008)The following sets forth the targets for increase of installed capacity in each plan period, as compared againstthe actual capacity addition achieved for the relevant period:Targeted capacity additionduring plan period (MW)Actual capacity addition(MW)Percentage of capacityaddition achieved during planperiod (%)4th Plan (1969-74) 3,518.00 1,058.39 30.085th Plan (1974-79) 4,654.00 3,867.77 83.11Annual Plan (1979-80) 548.00 550.90 100.536th Plan (1985-90) 4,768.00 3,076.05 64.517th Plan (1985-90) 5,541.25 3,828.41 69.09Annual Plan (1990-91) 1,006.50 445.50 44.26Annual Plan (1991-92) 754.30 436.00 57.808th Plan (1992-97) 9,282.15 2,427.65 26.1554

Targeted capacity additionduring plan period (MW)Actual capacity addition(MW)Percentage of capacityaddition achieved during planperiod (%)9th Plan (1997-02) 9,817.70 4,538.25 46.2310th Plan (2002-07) 14,393.20 7,886.00 54.79Source: Hydro Power Policy, MoP, 2008The 11 th Plan (2009 to 2014) envisages that in order to meet projected energy requirements of 1,038,000 MUand a peak load of 152,746 MW with a 5% spinning reserve, total capacity addition of approximately 82,500MW is required during the period. The 11 th Plan proposes that aggregate capacity addition of approximately78,700 MW be undertaken during the relevant period, to comprise 36,874 MW by the Government, 26,783 MWby the various states and the remaining 15,043 MW to be undertaken by private development. Of this,approximately 15,627 MW is targeted to be added by way of hydroelectric power schemes, comprising 8,654MW (representing 55.4% of the planned installed capacity for hydroelectric power schemes) by theGovernment, 3,482 MW (representing 22.3%) by various states and 3,491 MW (22.3%) to be undertaken byprivate development.The following table sets forth a summary of the targeted capacity addition during the 11 th Plan period:TotalThermal Break-upGas/ Liq.Hydropower Thermal Coal LNG Fuel Nuclear TotalCentral Sector 8,654 24,840 23,350 1,490 0 3,380 36,874State Sector 3,482 23,301 19,985 3,316 0 0 26,783Private Sector 3,491 11,552 9,515 2,037 0 0 15,043Total: 15,627 59,693 52,850 6,843 0 3,380 78,700Source: Power Scenario at a Glance, CEA, December 2009.According to CEA, 3,392 MW of installed capacity has been commissioned under hydroelectric power schemesand a further 12,235 MW is under construction as of May 31, 2009.Other Policy Initiatives for Encouraging Hydroelectric Power Development in IndiaWe believe that the development of India’s hydroelectric potential is a high-level priority of the Government.From time to time, the Government has taken a number of policy initiatives to address issues which impede thedevelopment of hydroelectric power projects in India, and has increased efforts to encourage hydropowerdevelopment through public as well as private sector participation.The CEA, in consultation with various states, the Department of Space, the MoEF, the Central WaterCommission, and the Geological Survey of India, initiated a ranking study of all hydroelectric sites with a viewto identifying the appropriate sequence in which basin projects should be taken up. The objective of the study isto promote the optimal utilisation of potential hydroelectric projects over the next few decades.According to the Hydropower Policy 2008, the CEA has estimated the hydropower development potential ofIndia at approximately 150,000 MW, based on its reassessment carried out between 1978 and 1987. As at theend of the 10 th Five Year Plan, aggregate installed capacity from hydroelectric power schemes wasapproximately 34,653 MW. The following table sets forth projected hydropower capacity additions during the11 th to 14 th Five Year plan periods:Plan PeriodHydropower CapacityAddition (MW)Total Hydropower Capacityat the end of plan (MW)11 th Plan (2007-08 to 2011-12) 15,627* 50,280*12 th Plan (2012-13 to 2016-17) 30,000 80,28013 th Plan (2017-18 to 2021-22) 31,000 111,28014 th Plan (2022-23 to 2026-27) 36,494 147,774Sources: Hydro Power Policy 2008, MoP; Power Scenario at a Glance, December 2009, CEA.55

According to Ministry of Power , the hydroelectric power potential of India is expected to be fully utilized as atthe end of the 14 th Five Year Plan period.In addition, the Government recently introduced a three-stage process for the development of new hydroelectricprojects in the Central Sector/Joint Ventures, which aims to reduce the time and cost overruns of hydroelectricprojects arising from hasty investigation of potential project sites and unavailability of proper projectdevelopment infrastructure such as access roads and land. The three stages of the new process are as follows:Stage I. Survey and investigation of project site, and preparation of pre-feasibility report.Stage II. Detailed investigation, preparation of a detailed project report and pre-construction activity includingland acquisition.Stage III. Execution of the project after approval of investment decision has been granted by the PIB/CCEA.The MoP has been authorised to sanction expenditures of up to Rs. 100 million on Stage I activities for newhydroelectric projects. In addition, expenditures of up to Rs. 500 million may be incurred in connection withStage II activities, subject to the review and approval by the PIB based on site clearances which have beenobtained from the MoEF and after the commercial viability of the project has been established. Proposals whichinvolve expenditures in excess of Rs. 500 million would require the approval of both the PIB and the CCEA.Revised EIA rulesThe MoEF issued a revised Environment Impact Assessment (“EIA”) notification dated September 14, 2006, inan effort to speed up the process of getting environmental clearance in respect of hydroelectric projects. Underthe revised notification, the MoEF will grant the final environmental clearance after considering theenvironmental proposal, the EIA report and the public hearing report. For details, see the section titled“Regulations and Policies in India” on page 87.Updated CERC regulationsThe tariff for our operating power station is determined by the CERC and may be revised during the term of therespective PPAs, depending on changes in tariff regulations issued by CERC. The tariff for the period endedFY2009 was determined by earlier CERC regulations. The tariff from April 1, 2009 onwards is determined bythe new tariff regulations issued by CERC vide notification no. L-7/145(160)/2008-CERC dated January 19,2009 for the period 2009-14. The tariff structure prescribed by the CERC comprises a number of elements,including the concept of annual fixed charges, incentives and unscheduled interchange charges.Annual fixed charges comprises energy charges and capacity charges and is determined by factors like return onequity, depreciation, interest on loan, interest on working capital and operation and maintenance expenses. FromApril 1, 2009, our tariffs have been based on the tariff regulations issued by the CERC and applicable for theperiod 2009 to 2014. For a discussion of the CERC’s tariff regulations and their effect on our results ofoperations, see the section titled “Management’s Discussion and Analysis of Financial Condition and Resultsof Operations – Factors Affecting Our Results of Operations” on page 129.Provisions for Mega Power ProjectsThe threshold limit to obtain mega power project status is 500 MW for hydropower projects. This threshold hasbeen reduced to 350 MW for projects located in Jammu & Kashmir, Sikkim and the North Eastern States. Thedevelopers of mega power projects receive a number of incentives, including a ten year income tax holiday andduty-free import of capital equipment. The State governments have also been requested to exempt suppliesmade to mega power plants from sales tax and local levies. These measures are intended to help in generatingmore hydroelectricity while the economies of scale in mega power projects will substantially bring down powertariffs.Hydro Power Policy 2008The Hydro Power Policy of 2008 lays emphasis on increasing private investment in the development ofhydroelectric projects. The policy aims at attracting private funds by encouraging joint ventures with privatedevelopers and the use of independent power producer (“IPP”) model besides promoting power trading and56

speeding up the availability of statutory clearances. This policy also provides special incentive for merchantsales of up to 40% of the saleable energy for the project(s) meeting the time lines and an additional 1% freepower from the project to be provided and earmarked for local area development fund, aimed at providing aregular stream of revenue for income generation and welfare schemes, creation of additional infrastructure andcommon facilities on a sustained and continued basis over the life of the project. It has been furtherrecommended that the host State government would also provide a matching 1% from their share of 12% freepower towards this corpus fund. For details, see the section titled “Regulations and Policies in India” on page87.Import Policy for Enhancing Hydropower UtilisationIndia faces acute peak power shortages. To bridge this demand-supply gap, the GoI is considering a powerimport policy to regulate power imports from neighboring countries. According to estimates at the BIMSTECworkshop in October 2006, Bhutan, Nepal and Myanmar have a combined hydropower potential of about140,000 MW, of which around 3,000 MW has been exploited as of December 31, 2007. India has providedfinancial and technological assistance to Nepal and Bhutan in the past and various hydroelectric projects havebeen completed in collaboration with India.Apart from these measures, the GoI has introduced several initiatives through the Electricity Act, 2003, theNational Water Policy, 2002, the National Electricity Policy, 2005, and the National Rehabilitation andResettlement Policy, 2007, which seek to encourage hydropower development. For details, see the section titled“Regulations and Policies in India” on page 87.57

OUR BUSINESSThe following information is qualified in its entirety by, and should be read together with, the more detailedfinancial and other information included in the Red Herring Prospectus, including the information contained inthe section titled “Risk Factors” beginning on page xiii.OverviewWe are a hydroelectric power generation company originally established as a joint venture between theGovernment and the state government of Himachal Pradesh to develop and operate the NJHPS. Based oninformation published by the CEA, the NJHPS is currently the largest operational hydroelectric powergeneration facility in India based on installed capacity, with an aggregate generation capacity of 1,500 MW, andis located on the Sutlej River in the state of Himachal Pradesh.We were incorporated in 1988 as a private limited liability company, and in August 1991, we officially tookover the construction and operation of the NJHPS from the HPSEB. In October 2003, the first 250MWhydroelectric power generation unit was commissioned at the NJHPS, and by May 2004, all six powergenerating units at the NJHPS had been commissioned and the NJHPS was fully operational. For the yearsended March 31, 2007, 2008 and 2009, the NJHPS generated 6,014 MU, 6,449 MU and 6,609 MU of power andfor the nine months ended December 31, 2009, aggregate power generation at the NJHPS amounted toapproximately 6,332 MU.The NJHPS is currently our only hydroelectric power project in operation. We are required to supply 12% of ourannual generation from the NJHPS to the state of Himachal Pradesh free of cost, and an additional 1% of ourannual generation from projects located in the state of Himachal Pradesh to a local area development fundestablished by the state government of Himachal Pradesh for the purposes of providing a regular stream ofrevenue for income generation and welfare schemes, creation of additional infrastructure and common facilitieson a sustained and continued basis over the life of the project. As at the date of this Red Herring Prospectus, wehave not supplied any power to the state-established local area development fund, as may be required under acabinet decision of the state government of Himachal Pradesh, and may be required to do so in the future. See“Risk Factors—Internal Risk Factors— Risks Relating to our Business- We may be required to allocate anadditional one percent of the power generated by the NJHPS to a local development fund established by thestate government of Himachal Pradesh” on page xix. Out of the remaining 88% of power generated by theNJHPS (which will be reduced by 1% to 87% in the event we are required to supply power to the local areadevelopment fund), 25% is supplied to the state of Himachal Pradesh and the remainder is supplied to variousstates located in the Northern region of India pursuant to ten long-term power purchase agreements, two ofwhich have expired and are in the process of being renewed.Through our construction and operation of the NJHPS, we have gained experience in the design, development,construction and operation of hydroelectric projects, and the execution and management of all aspects of suchprojects from the initial stages of concept to the commissioning, operation and maintenance of such projects.We are currently constructing the Rampur Project, which is expected to be a 412 MW hydroelectric powergeneration facility located downstream from the NJHPS. The Rampur Project is currently projected to becompleted and commissioned in 2013. We have also been awarded the rights to develop and operate twohydroelectric projects with an expected aggregate generation capacity of 825 MW by the state government ofHimachal Pradesh (in each of which we are expected to have a 51% participation interest). We have also enteredinto a memoranda of understanding with the state government of Uttarakhand for three hydroelectric projectswith an expected aggregate generation capacity of 363 MW. We have further agreed to participate in a jointventure with NHPC Limited and the state government of Manipur for the development and operation of a 1,500MW hydroelectric power project to be located in Manipur. We have also diversified our operations to targethydroelectric power projects available outside of India, and have been awarded the rights to construct andoperate on a build, own, operate and transfer (BOOT) basis, a 900 MW hydroelectric power project to belocated in the Sankhuwasabha district of Nepal, through participating in a competitive tender held by theNepalese government. Through these projects, we expect to increase our total installed power generationcapacity by approximately 3,588 MW.We have also agreed to take a minority interest in a joint venture to be established for the development of atransmission line in the territory of India, which is part of a transmission line expected to connect Dhalkewar inNepal to Muzaffarpur in India, and also intend to expand into providing technical advisory and consultancyservices.58

We have historically been able to achieve high levels of operational efficiencies, which are reflected throughhigh average capacity indices for the NJHPS. Under the previous tariff regulations which were effective duringthis period, we were entitled to certain incentive payments based on our capacity index levels, as determined bythe NRPC. Under the new tariff regime which is performance-based, we will be entitled to these incentivepayments only if our monthly plant availability factor exceeds a pre-determined normative annual plantavailability factor applicable to the NJHPS of 82%. According to data published by the NRPC, for the financialyears ended March 31, 2007, 2008 and 2009, our annual plant availability factor (calculated as the average ofour monthly plant availability factors in the period) for the NJHPS was 92.4%, 96.7% and 96.1%, respectively,which exceeded the normative annual plant availability factor applicable to the NJHPS of 85% applicable inthose years.We have obtained various ISO and OHSAS certifications for our operation of the NJHPS and with respect toour construction of the Rampur Project, as well as for our corporate, environmental, health and safetymanagement systems. In May 2008, in recognition of our strong and consistent performance in achieving theannual performance targets set by the Government, we were designated as a Mini-Ratna Category-I publicsector undertaking. As a Mini-Ratna Category-I public sector undertaking, we will have greater autonomy inundertaking certain investments without obtaining prior approval from the Government, subject to aninvestment ceiling of Rs. 5,000 million. In May 2008, we were also upgraded from a Schedule B public sectorundertaking to a Schedule A public sector undertaking.We have also obtained several award achievements from third party institutions for excellence in various fields,such as corporate leadership, engineering, financial and operational strength, health and safety management,hydroelectric power development, social contribution and environmental management. For example, inrecognition of our commitment to the environment, we obtained several awards from the Greentech Foundationfor our environmental management and policies at the NJHPS and the Rampur Project. We have also receivedthe Rajiv Gandhi National Quality Award, 2008, in the ‘Best of All’ category from the Bureau of IndianStandards.Based on our restated audited financial statements for the years ended March 31, 2007, 2008 and 2009, wegenerated total revenues of Rs. 14,761.7 million, Rs. 14,622.8 million and Rs. 16,348.4 million, respectively,and profit before tax of Rs. 7,692.5 million, Rs. 8,178.0 million and Rs. 10,025.5 million, respectively.Our Competitive StrengthsWe believe that we have the following key competitive strengths:Experience in hydroelectric power project development. We have experience in the development, executionand management of mega-hydroelectric projects through our development and operation of the 1,500 MWNJHPS, which is the largest hydroelectric power generation facility in India based on generation capacity, and islocated in the geo-technically sensitive Himalayan region. We believe that the design of the NJHPS is unique inits complexity, and has enabled us to achieve operational and maintenance efficiencies which has translated intolower operational and maintenance costs for the NJHPS. We believe that we will be able to leverage ourexperience in developing the NJHPS to effectively develop and operate our existing pipeline of projects, as wellas obtain new projects in the future. Further, we believe that our experience in dealing with public interestgroups, non-governmental organizations and local communities, as well as in the land acquisition process andwith geological issues peculiar to the Himalayan region will prove to be valuable in any development of newprojects going forward.Established track record of operational excellence. Since the commissioning of the NJHPS, we haveconsistently met or exceeded Government-set performance targets for our operations, and have been upgraded toa Schedule A public sector undertaking and designated as a Mini-Ratna Category-I public sector undertaking inrecognition of our efforts. We have also obtained ISO quality certifications for our operations, and severalawards for excellence in various fields, such as corporate leadership, engineering, financial and operationalstrength, health and safety management, hydroelectric power development, social contribution andenvironmental management. We believe that our established performance track record and experience inexecuting, operating and managing the NJHPS will give us a competitive advantage in developing largehydroelectric power projects, both in India and abroad.59

Stable revenue stream through long-term power purchase agreements with state electricity boards anddistribution licensees. We have entered into ten power purchase agreements with state utilities in the Northernregion of India, two of which are in the process of being renewed, under which all of the power generated by theNJHPS (except for 12% of our annual generation which is allocated to the state of Himachal Pradesh free-ofchargeand an additional 1% of annual generation from projects located in the state of Himachal Pradesh, whichis allocated to a state-established local development fund) is sold to state electricity boards. Payment for sales ofelectricity to these state utilities are typically secured by forms of credit support such as letters of credit issuedby reputable financial institutions or by state government guarantees. We have not experienced any significantdelays in payment or payment defaults by such customers in the past, and we maintain strong workingrelationships with these customers.Ability to capitalize on performance-based incentives under the current tariff regime. Since the fullcommissioning of the NJHPS in May 2004, we have consistently achieved a monthly plant availability factor ofmore than 82%, which is the normative annual plant availability factor which has been set by the CERC for theNJHPS under the new tariff regulations which are effective from April 1, 2009 to March 31, 2014. Subject todisruptions to our operations arising from factors not within our control such as water supply availability, siltlevels, power evacuation constraints and prevailing weather conditions, we believe that we will be able tomaintain our performance going forward, and will thus be eligible to recover the full amount of capacity chargesas well as qualify for certain performance-based incentives under the new tariff regime based on excessgeneration and normative annual plant availability factor.Established reputation for good corporate governance and environmental and social responsibility. One ofour key corporate objectives is to manage our business effectively while striving to minimize disruptions to theenvironment and local communities in the areas where our projects are located. We are especially cognizant of,and committed to our environmental and social responsibilities and towards this end, have implemented severalcorporate initiatives for the benefit of local communities in our project areas, as well as to mitigate the effects ofour hydroelectric project operations on the surrounding environment, in excess of current Indian legal andregulatory requirements. We believe that our commitment to our social and environmental responsibilities hasbeen key in establishing our reputation and credibility as a highly rated power generation company, which wewill be able to leverage in tendering for new projects going forward, and will also prove to be advantageous inminimizing opposition from public interest groups, non-governmental organizations and local communities inour future project areas under development, thus facilitating our timely completion of such projects.Existing committed work force. We fully recognize that the contribution of our employees is integral to theachievement of our ambitious plans and have thus adopted an organizational philosophy which acknowledgesand rewards their contributions. We subscribe to the philosophy that human resources are the key to the successof an organization. This calls for the creation of a conducive work environment capable of maximizingemployee commitment to our Company through, for example, programs and initiatives which facilitateindividual growth and achievement, as well as optimizing career certainty and growth for each individualemployee. We continually strive to create a transparent organization in which career progression for each of ourexecutive level staff is clearly delineated and are in the process of redefining our employee programs for nonexecutivestaff to align their objectives more closely with those of our Company.Strong cash position to support project development and operations. We believe that our strong historicalfinancial performance and steady cash flows from our existing operations at the NJHPS are sufficient to fund,through our internal resources, the equity contribution portion for our existing pipeline of projects, and supportour working capital requirements, while at the same time servicing and repaying our existing debt on a timelyand reliable basis, and maintaining a healthy level of cash on our balance sheet. For the years ended March 31,2007, 2008 and 2009 and the nine months ended December 31, 2009, our cash and cash equivalents wereapproximately Rs. 6,210.4 million, Rs. 6,936.0 million, Rs. 12,714.4 million and Rs. 14,871.5 million,respectively. We believe that our strong cash position and cash flow generation capabilities from the NJHPS areattributable to a number of sustainable long-term factors, including stable customer demand, stable coststructure and an experienced and capable management team.Guaranteed return on capital under prevailing tariff regime. Pursuant to past and prevailing Governmentpolicies, electricity tariffs which may be charged by a power producer with respect to power supplied by it froma particular project are determined based on a formula which incorporates a guaranteed return on equity. For theprevious tariff regime in effect from April 1, 2004 to March 31, 2009, the guaranteed rate of return on equitywas 14%, and under the new tariff regime currently in effect from April 1, 2009 to March 31, 2014, theguaranteed rate of return on equity is 15.5%. Under Government policies and prevailing regulations, up to 30%60

of aggregate project costs in relation to a project is eligible for the guaranteed rate of return on equity. Weobtained a special dispensation for the NJHPS, under which our tariff rate charged for power supplied from theNJHPS incorporates a guaranteed rate of return on equity on 50% of the project costs (being the amount ofproject costs which were financed by equity contributions). We anticipate that we will be well positioned tobenefit from Government policy incentives as the Indian energy sector continues to develop.Our StrategyThe main elements of our business strategy include the following:Pursue business and capacity expansion plans to meet rising energy demand and increase our market share.We anticipate that demand for energy in India will continue to increase, and we believe that we are wellpositioned to benefit from such increased demand. We estimate that we will add approximately 3,588 MW toour aggregate generation capacity through the development of our existing pipeline of projects, subject tounforeseen circumstances which may cause completion delays or revisions to project parameters, and intend topursue new opportunities for hydroelectric power projects as they become available, both in India and insurrounding regions in countries such as Bhutan and Nepal and elsewhere, which we believe have greatdevelopment potential. We intend to pursue opportunities through direct tenders for projects, as well as throughpartnering with high quality power developers to tender for new projects which become available. See thesection titled “Risk Factors—Internal Risk Factors- Risks Relating to Our Business—Our expansion intoemerging geographic markets exposes us to risks associated with investing and carrying out operationswithin those markets” on page xxxiii.Continue to provide sustainable and reliable electricity supply to our customers. We will continue to focus onproviding reliable sustainable energy to new and existing customers through maintaining our performancestandards at the NJHPS, as well as on the development of new hydroelectric power projects in anenvironmentally and socially responsible manner. To this end, we intend to focus on modernizing andmaintaining our operations at the NJHPS in line with internationally recognized quality and technical standards,as well as invest in viable equipment upgrades to further optimize our performance.Pursue diversification initiatives. We intend to diversify our business operations into various alternative energyprojects, such as wind power and solar energy projects. We are currently in the process of evaluating thefeasibility of such alternative energy projects, and have obtained board approval to engage professionalconsultancies with the appropriate technical knowhow and expertise, with the objective of identifying anysuitable business opportunities in these alternative energy sectors. In addition to this, we also intend to pursuegeographical diversification through tendering for hydroelectric power projects outside of India, and to leverageour technical expertise and know-how in the hydroelectric power sector into establishing a technical consultancyand advisory business focusing thereon. We have also agreed to take a minority stake in a joint venture companywith certain other private sector parties for the development of part of a power transmission line connectingIndia and Nepal. See “Risk Factors—Internal Risk Factors- Risks Relating to Our Business—Our currentbusiness strategy involves, among others, the diversification of our operations into various alternative energyprojects, such as wind power and solar energy, in which we have no prior operational history” on page xx.Maintain our focus on environmental and corporate social responsibility. We have undertaken a number ofenvironmental and corporate social responsibility initiatives and intend to expand our involvement in theseareas. We aim to conduct our business operations in a manner that promotes social responsibility, sustainabledevelopment, minimization of ecological and social disturbances and to raise the living standards of the localcommunities in our project areas and contribute to their advancement. We will continue to monitordevelopments in environmental and social conditions in our operational project areas with the objective ofaddressing any concerns in a timely manner.Increase profitability and shareholder value through capitalization on efficiency incentives under the currenttariff regime and the clean development mechanism scheme. We intend to pursue improvements to ourprofitability with the objective of increasing shareholder value through, among others, capturing to themaximum extent possible financial incentives and benefits associated with increased operational efficiencywhich are available under the current tariff regime, as well as through registering our hydroelectric powerprojects under the United Nations Framework Convention on Climate Change of 1994 to earn certified emissionreduction credits, which may be sold to industrialised countries. We are also in the process of investigating othercarbon trading initiatives which may be applicable to our projects.61

Our OperationsWe are in various stages of developing each of our existing pipeline of projects, further details of which are setout in “—Our Projects—Projects under development.”From our experience, the following is a description of the key steps in the development and operation of ahydroelectric power project:Project Assessment and ClearanceGenerally, for projects to be undertaken by central or state-owned enterprises, a hydroelectric power project isconceptualized by the Government in conjunction with state governments, based on analyses of existing andprojected installed generation capacity and supply factors, as well as projected demand for such electricity. If, asa result of such analyses, the Government and state government determine that a hydroelectric power projectshould be developed and award such project to us, we then enter into a memorandum of understanding orimplementation agreement with the relevant state government with respect to the project in question, andproceed to apply for the requisite clearances and approvals under the three-stage clearance process for publicsector undertakings introduced by the Government in June 2001.The three stage clearance-process is as follows:Stage I – Preparation of pre-feasibility report/feasibility report. In preparing a pre-feasibility or feasibility studyreport, we typically use a combination of internal resources and third party appointments to collect data andprepare reports or analyses, establish testing and discharge sites and conduct meteorological, geological andhydrological investigations, surveys and measurements, including conducting geological explorations for thepurposes of determining dam and powerhouse placement and optimal civil structures for the project,topographical surveys of the project areas, and undertaking environmental assessments and studies. Based onthe results of these investigations and our analysis, we then prepare a feasibility study report, which is thensubmitted to the CEA for initial review. The feasibility study report typically sets out key preliminarygeological, hydrological, meteorological and topographical observations, as well as technical details of theproposed power generation facilities, justifications for the project and certain preliminary financial estimates.This report is reviewed by the CEA, which makes a determination about the commercial viability of the project.All preliminary project estimated costs must also be approved by the MoP. Concurrently during this process, wetypically apply for environmental clearances for pre-construction activities such as site clearance. We also liaisewith the MoEF in the preparation and agreement of the terms of reference for the purposes of an environmentalimpact assessment report (an “EIA”) to be prepared in Stage II.Stage II – Preparation of detailed project report and commencement of infrastructure development works.Following the approval of the feasibility study report by the MoP and the CEA, and after obtaining all requisiteclearances from the MoEF, we proceed to carry out extensive survey and investigation works in order to preparea detailed project report. The detailed project report sets out the scope of the work, detailed specifications of keycomponents, salient features, general and design aspects, cost estimates and financial analysis, and is reviewedby various governmental agencies, including the Geographical Survey of India, the Central Water Commission,the Ministry of Water Resources and the Ministry of Defence. Concurrently with the preparation of the DPR, wealso prepare the EIA which is then submitted to the state government as well as to the Ministry of Environmentand Forest. A report setting out forest land requirements is also prepared and submitted to the Ministry ofEnvironment and Forest for their approval. We also reach out to local communities to establish lines ofcommunication and, in the case of affected communities which may need to be relocated, negotiate a suitablerehabilitation and resettlement package for such communities.Stage III – Project construction. Once all Stage II approvals have been obtained, we prepare a final proposalwhich is submitted to the CCEA for its approval, together with written recommendations from the PIB and theGovernment. Upon obtaining the approval of the CCEA, project construction commences, subject to thecompletion of the land acquisition process.Project Design and ConstructionThe engineering and design of a hydroelectric project requires integrated input from a number of specializedengineering disciplines:62

• Civil and hydro-mechanical design. This involves the development of detailed site plans, including civilwork layouts, review of hydrological data and supervision of field surveys, investigations and hydrologicalstudies and assessment of the impact of soil erosion and sedimentation levels on the hydroelectric project;• Geological and geotechnical design. This involves the collection of sufficient qualitative and quantitativegeological, geotechnical and construction material information to determine the base design parameters forthe major civil structures of the project. Geological and geotechnical investigations such as exploratorydrilling, surface mapping, trenching and pitting are undertaken to enable identification of overburden androck types, to identify and select the construction materials to be used in stabilizing slopes and in thefoundation, and to determine the leakage required for the structures. Assessments of seismicity areundertaken to ensure that earthquake effects have been adequately addressed in the geotechnical structuredesigns, as well as assessments of technical risks such as unknown subsurface conditions;• Electrical and mechanical design. This involves the assessment of the electrical and mechanical needs ofthe project and the preparation of electromechanical engineering designs for the project, provision oftechnical data and cost estimates on electrical and mechanical equipment, and the preparation of operationand maintenance manuals for electromechanical works.We typically act in a supervisory role in the construction of our hydroelectric power projects, and areresponsible for the overall supervision and management of the project. Based on the specific characteristics andrequirements of the project in question, we determine the works which are required to be completed and the typeand number of sub-contractors required to be engaged for the purposes of constructing the project. In general,depending on the size of the project in question, between one and two contracts are awarded for the civil works,and one contract is awarded respectively for each of the hydromechanical components and theelectromechanical components. We award our major project contracts under competitive tender processes whichwe believe are in accordance with international standards. The tender processes takes into consideration thegeneral, technical and financial suitability of each of the bidding contractors, are transparent and providerecourse through well-developed dispute resolution mechanisms.We typically establish a project office on each site, and designate a representative employee to liaise with eachof our sub-contractors and to monitor construction progress. Our project office representatives typically liaisewith our internal technical staff, who also make regular site visits for the inspection and supervision of ongoingworks, in reviewing and providing feedback on the construction process and methodologies employed. Our teamof engineers monitor the work of our subcontractors closely to ensure that such work is performed withinparameters and to specification. Prior to delivery, our commissioning and start-up team will conduct field testingto ensure that the facility meets contractual specifications as well as national regulations and internationalstandards.Our ProjectsThe following table sets forth a summary of our projects under operation, construction, development andimplementation:ProjectState/CountryInstalled Capacity(Actual/Anticipated)Operational projectNJHPS............................................................. Himachal Pradesh, India 1,500 MWProject under constructionRampur............................................................ Himachal Pradesh, India 412 MWProjects under development/implementationLuhri (1) ............................................................. Himachal Pradesh, India 775 MWDhaulasidh (2) .................................................... Himachal Pradesh, India 50 MW (3)Devsari ............................................................ Uttarakhand, India 252 MWNaitwar Mori................................................... Uttarakhand, India 60 MWJakhol Sankri................................................... Uttarakhand, India 51 MWArun-III ........................................................... Nepal 900 MWTipaimukh (4) .................................................... Manipur, India 1,500 MWOthersTransmission JV.............................................. Nepal/India N.A.63

Notes:(1) This project will be constructed by a special purpose vehicle to be established between our Company and the state of HimachalPradesh, in which we have agreed to take a 51% equity interest and the state of Himachal Pradesh has agreed to take a 49% equityinterest.(2) Pursuant to the terms of the agreement awarding us the right to develop, construct, own and operate the Dhaulasidh Project, thestate government of Himachal Pradesh will own a 49% interest in this project. The method by which this allocation will be achievedis currently under review by our Company.(3) A revised feasibility study report has been prepared with respect to this project which revises the proposed installed capacity fromthe original 50 MW to 66 MW. This is currently under review by management.(4) This project will be developed by a joint venture company to be established in which we have agreed to take a 26% equity interest,with NHPC Limited and the state of Manipur taking a 69% and 5% equity interest respectively. This project was originally awardedto the North Eastern Electric Power Corporation and is in the process of being transferred, pursuant to minutes of meeting datedJuly 6, 2009 of the MoP whereby it was determined by the Government that the project would be developed by the joint venturecompany to be established by NHPC Limited, the state of Manipur and our Company. See the section titled “Risk Factors—InternalRisk Factors- Risks Relating to Our Business—Some projects which may have originally been awarded to us, may be transferredto other of our competitors by the Government or state governments” on page xxii.Operational Project – The Nathpa Jakhri Hydro Power Station (NJHPS)The NJHPS is a 1,500 MW (6 x 250 MW) run-of-the-river hydroelectric power station with pondage. Thestation is located on the Sutlej river in Himachal Pradesh, India. In 1988, we were incorporated as a jointventure between the Government and the state government of Himachal Pradesh to construct and operate theNJHPS, and the project was officially handed over to us in August 1991 by the HPSEB.In July 1993, we commenced construction of the project, after having received all requisite approvals for thecommencement and construction of the project. In October 2003, the first of six 250MW hydroelectric powergeneration units was commissioned, and by May 2004, the power station was fully operational.The NJHPS features a 62.5 meter high concrete dam, an underground desilting complex comprising fourchambers measuring 525 meters in length, 16.31 meters in width and 27.5 meters in depth, a head race tunnel of10.15 meters in diameter and 27.30 kilometers in length, a 301 meter deep surge shaft, three circular steel-linedpressure shafts of 4.9 meters in diameter and between 571 meters and 622 meters in length, an undergroundpowerhouse measuring 222 meters in length, 20 meters in breadth and 49 meters in depth, housing six 250 MWturbine units, and a tail-race tunnel of 10.15 meters in diameter and 982 meters in length. This power station hasan annual design energy generation capacity of 6,612 MU in a 90% dependable year. The NJHPS is situated onapproximately 405.8 hectares of land, of which 218.7 hectares were acquired by our Company pursuant to theland acquisition process and approximately 187.2 hectares of forest land have been diverted for use by ourCompany for the operation of the NJHPS by the MoEF.Offtake arrangements. The following table sets out the parties to whom we supply power under PPAs enteredinto by us with such parties:PartyStateDate ofcommencement of PPA Duration of PPAPunjab State Electricity Board ................................................... Punjab October 24, 2002 35 yearsHaryana Vidyut Prasaran Nigam Limited.................................. Haryana January 14, 2003 35 yearsChandigarh Administration, Engineering Department Chandigarh December 18, 2002 35 yearsGovernment of Himachal Pradesh (1) ......................................... Himachal Pradesh October 31, 2005 35 yearsHimachal Pradesh State Electricity Board (1) ............................. Himachal Pradesh March 31, 2003 40 yearsDelhi Transco Limited ............................................................... Delhi March 27, 2003 35 yearsPower Development Department of Jammu and Kashmir (2) ..... Jammu and Kashmir July 29, 2003 5 yearsRajasthan Rajya Vidyut Prasaran Nigam Limited..................... Rajasthan February 28, 2003 with asupplementary agreemententered into on May 19, 200435 yearsUttar Pradesh Power Corporation (2) ........................................... Uttar Pradesh April 19, 2004 5 yearsUttarakhand (formerly Uttaranchal) Power CorporationLimited ....................................................................................... Uttarakhand December 22, 2005 35 years64

Notes:(1) This PPA does not govern the supply of 12% of the annual generation from the NJHPS which is required to be made to the state ofHimachal Pradesh free-of-charge pursuant to Government policies.(2) This PPA has since expired. However, the terms of this PPA provide that upon expiry, the terms set forth in such PPA will continue togovern the supply of electricity to such party pending the execution of a new PPA or an extension thereto.Due to the current imbalance between demand and supply in the Indian power sector, and the competitive ratesat which we are able to supply power, we do not currently foresee difficulties with renewing these PPAs whenthey expire. Each of our PPAs currently provide that in the event that it expires, the terms of the expired PPAwill continue to govern our supply of electricity to such party until the execution of a new PPA or an extensionthereto. Two of our PPAs have currently expired, and we are in the process of having them renewed. Our supplyof power to customers under these expired PPAs are governed by the terms of the expired PPA until such timeas it is renewed or replaced. See “Risk Factors—Internal Risk Factors- Risks Relating to Our Business—Certain of our power purchase agreements have expired” on page xxix.Pursuant to Government policies and our constitutional documents, we are required to supply 12% of theaggregate power generated by the NJHPS to the state of Himachal Pradesh free-of-charge, and 1% of aggregatepower to a state-established local area development fund. As at the date of this Red Herring Prospectus, we havenot supplied any power to the state-established local area development fund, as may be required under a cabinetdecision of the state government of Himachal Pradesh, and may be required to do so in the future. See “RiskFactors—Internal Risk Factors— Risks Relating to Our Business—We may be required to allocate anadditional one percent of the power generated by the NJHPS to a local development fund established by thestate government of Himachal Pradesh” on page xix. Out of the remaining 88% of power generated by theNJHPS (which will be reduced by 1% to 87% in the event we are required to supply power to the local areadevelopment fund), 25% is supplied to the state of Himachal Pradesh at the tariff determined by the CERC inaccordance with prevailing tariff policies and regulations. All remaining power generated by us has beenallocated by the MoP to various states or union territories in the Northern Region of India. The following tableshows the allocation of power to the Northern region states or union territories as follows:Percentage (%) (1)State/Union Territory(based on installed capacity of 1500 MW)Haryana................................................................. 4.27Himachal Pradesh (2) .............................................. 36.47Jammu & Kashmir ............................................... 7.00Punjab ................................................................... 10.13Rajasthan .............................................................. 7.47Uttar Pradesh ........................................................ 14.73Uttaranchal (3) ........................................................ *Chandigarh ........................................................... 0.53Delhi ..................................................................... 9.47Unallocated (4) ........................................................ 9.93Total ..................................................................... 100.00Notes:(1) Based on information published on the NRPC website.(2) Includes power supplied to the state of Himachal Pradesh based on its entitlements to 12% of power supplied by theNJHPS free-of-charge and 22% pursuant to the articles of association of our Company. As of the date of this Red HerringProspectus, we have not supplied any power to the state-established local area development fund, as may be requiredunder the cabinet decision of the state government of Himachal Pradesh (Press Note No. 884/2009-PUB). See “RiskFactors—Internal Risk Factors- Risks Relating to Our Business—We may be required to allocate an additional onepercent of the power generated by the NJHPS and the Rampur Project to a local area development fund established bythe state government of Himachal Pradesh” on page xix.(3) The state of Uttaranchal elected to surrender its power allocation to the Government, which was subsequently re-allocatedto the state of Punjab.(4) The Government is entitled to allocate this power to states or union territories in the Northern region on a discretionarybasis.We charge these customers for supplies of electricity made to them based on tariffs which are determined by theCERC in accordance with tariff regulations currently in force. For a description of our tariffs, please see65

“Management’s Discussion and Analysis of Financial Condition and Results of Operations – FactorsAffecting Our Results of Operations” on page 127.Operational statistics. The following table sets out certain operational statistics and metrics with respect to theNJHPS:Year ended March 31,Nine monthsendedDecember 31,2005 2006 2007 2008 2009 2009Installed capacity (MW)........................................... 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0 1,500.0Gross generation (MU) (1) ......................................... 5,170.8 4,401.4 6,014.5 6,449.0 6,608.7 6,332.4Ex-bus generation (MU) (1)(2) ..................................... 5,108.8 4,055.2 5,942.3 6,385.3 6,547.8 6,275.2Saleable energy (MU) (3) ........................................... 4,467.6 3,533.9 5,179.1 5,564.7 5,759.5 5,521.9Plant availability factor/capacity index (%)............. 94.5 69.2 92.4 96.7 96.1 102.6Normative annual plant availability factor (%) ....... 85.0 88.8 85.0 85.0 85.0 82.0Notes:(1) Based on information published by the NRPC. Gross generation is calculated as the sum of total power generated at generatorterminals from all units of a station.(2) Ex-bus generation is power generated which is delivered to the grid at the transmission line (busbar) of the NJHPS.(3) Saleable energy is calculated as ex-bus energy scheduled by the generating station for a day less the share of free power for homestate from actual ex-bus generation.Project cost estimates and financing arrangements. We have obtained CCEA approval for project costs of Rs.81,877.13 million. These project cost estimates were increased several times over the duration of the projectconstruction, primarily due to unforeseen events such as floods which materially damaged project equipmentand sites, and underground geological conditions which necessitated additional work outside of the originallycontracted scope of work, each of which resulted in significant completion delays. These project costs werefurther increased due to inflationary pressures and the depreciation of the Rupee against currencies such as theU.S. dollar experienced over the period. See “Risk Factors—Internal Risk Factors- Risks Relating to OurBusiness—The development of hydroelectric power projects typically requires substantial initial capitalexpenditures” on page xxviii. In addition, we have received certain contractor claims with respect to the NJHPSfor additional work or time extensions. See “Risk Factors—Internal Risk Factors- Risks Relating to OurBusiness—We have not obtained approval for the recovery of certain project costs incurred in thedevelopment of the NJHPS” on page xxvi.Of actual project costs incurred, approximately Rs. 79,908.0 million has been approved by the CERC as capitalexpenditures which are recoverable through the imposition of annual fixed charges, and as qualifying capitalexpenditures on which we are entitled to a return on equity of 15.5%, under current Government policies andregulations.The NJHPS was financed through equity contributions by the state of Himachal Pradesh and the Government ofRs. 10,272.0 million and Rs. 30,816.1 million respectively, as well as through debt financing of approximatelyRs. 38,373.1 million in aggregate. Debt financing incurred by our Company in connection with the constructionof the NJHPS comprised two loans from the Power Finance Corporation of approximately Rs. 14,380.0 millionin aggregate outstanding principal amount, external commercial borrowings from overseas lenders ofapproximately Rs. 5,664.1 million, a syndicated term loan of approximately Rs. 2,950.0 million in outstandingprincipal amount and a Government fixed-rate loan of approximately Rs. 15,379.0 million in principal amount.In connection with the Government loan made to us, the Government obtained financing from the World Bankfor an outstanding principal amount of US$422 million. We refinanced the outstanding amount of thisGovernment loan by obtaining loan facilities of approximately Rs. 15,379.0 million in aggregate through certaincommercial banks and financial institutions. As of December 31, 2009, we had outstanding obligations due inconnection with the construction of the NJHPS of approximately Rs. 12,684.0 million.Power evacuation. Power generated by the generation units at the NJHPS is evacuated through two doublecircuit400 KV transmission lines to the Northern grid. The first transmission line of 180 kilometers in length66

connects the NJHPS with the Abdullapur sub-station of PGCIL in Haryana, and the second transmission line of145 kilometers in length connects the NJHPS with the Nalagarh sub-station of PGCIL in Himachal Pradesh.Both these transmission lines in turn transmit power to the Northern grid of India.Procurement. Through international competitive bidding processes, we awarded the following main contractswith respect to the construction of the NJHPS:Type of contract awardedCivil worksCivil worksCivil worksElectromechanical worksElectromechanical worksElectromechanical worksContractorjoint venture between Continental Construction (India) andFoundation (Canada)joint venture of Hindustan Construction Co. (India) andImpregilo (Italy)consortium comprising Jaiprakash Industries Ltd. (India) andHyundai (Korea)consortium comprising ABB (Germany), Kvaerner Energy A.S.(Norway), Sulzer Hydro (Switzerland), Siemens (Germany),ABB (India) and BHEL (India)GEC Alstom (France)BHEL (India)Approvals/Clearances. For a description of the approvals and clearances obtained with respect to the NJHPS,see “Government and Other Approvals” on page 161.Awards/Qualifications. We have obtained the following ISO qualifications and awards with respect to theNJHPS:Awarding Organization Award/QualificationDate of award CategoryGreentech Foundation Greentech Foundation Safety Award (Silver) May 2009 Safety Management at the NJHPSGreentech Foundation Greentech Foundation Safety Award (Silver) 2008 Safety Management at the NJHPSGreentech Foundation Greentech Foundation Safety Award (Silver) February 2007 Safety Management at the NJHPSGreentech Foundation Greentech Foundation Safety Award (Silver) April 2006 Safety Management at the NJHPSDet Norske Veritas ISO 9001:2000 February 2007 Quality Management SystemsGovernment-set performance targets. We have consistently met certain annual performance targets which havebeen set by the Government with respect to our operations at the NJHPS, which are set forth in a memorandumof understanding entered into between our Company and the Government at the beginning of each financialyear. The following table sets forth certain selected performance targets relating to generation targets for thefinancial years ended March 31, 2007, 2008 and 2009 and our actual generation and performance targets forthose years:Financial year ended March 31,2007 2008 2009Target Actual Target Actual Target ActualOperational performance:Gross energy generation (MU) 6,400 6,014 6,720 6,449 6,600 6,608.7Plant availability factor (%) 90% 92.4% 88% 96.7% 92% 96.1%Financial performance:Gross sales (Rs. millions) 12,820 14,094.6 14,030 13,567.5 13,780 14,907.8Net Profit/Net Worth 0.096 0.124 0.126 0.126 0.116 0.125Rating Very Good (1) Very Good (1) Excellent (2)Notes:(1) There are five rating categories with different performance targets for each category: “Excellent,” “Very Good,” “Good,”“Average” and “Poor”. In each of these years, our Company achieved the rating of “Very Good” as we met the performancetargets for such rating. The performance targets shown in these columns are based on the “Excellent” category.(2) We achieved the rating of “Excellent” as we met the performance targets for such rating in this year.67

For the financial year ended March 31, 2010, according to information published by the NRPC, our grossenergy generation was 7,017.55 MU. Our performance target for gross energy generation set in thememorandum of understanding entered into with the Government for the relevant year was 6,600 MU.Project under Construction – the Rampur ProjectThe 412 MW Rampur Project is located downstream of the NJHPS on the Sutlej River, and is a tailracearrangement which is expected to use the desilted water discharged from the NJHPS. The Rampur Project iscurrently expected to be completed by 2013. We signed the implementation agreement for the Rampur Projectwith the state government of Himachal Pradesh in October 2004, and the project was approved by the CCEA inJanuary 2007. We commenced construction works on the Rampur Project in February 2007, after obtaining allrequisite statutory clearances required in connection with the construction works.The Rampur Project is expected to feature a head-race tunnel of 15.14 kilometers in length and 10.5 meters indiameter, a surge shaft of 155.75 meters in height, and 38 meters in diameter, a valve house of 69 meters inlength, 10.5 meters in width and 23 meters in height, housing 3 butterfly valves on three penstocks of between368 meters and 382 meters in length and 5.4 meters in diameter, a surface power house of 158 meters in length,24.5 meters in width and 48 meters in height, housing six 68.67 MW Francis turbines, and a tail-race tunnel of67.15 meters in length and 10.5 meters in diameter. These measurements vary from the initial projectmeasurements relating to such facilities set forth in the detailed project report submitted to the CERC and CEAfor approval, due to certain design changes that were required as a result of prevailing geological conditions.When completed, the power station is expected to have a designed annual energy generation capacity of 1,770MU in a 90% dependable year based on a 95% plant availability factor. The Rampur Project is expected to besituated on approximately 100.5 hectares of land, of which 29.2 hectares were acquired by our Companypursuant to the land acquisition process over a period of approximately 18 months and the remaining 70.3hectares of forest land have been diverted by the MoEF for use in connection with the operations of the RampurProject by our Company. We also purchased approximately one hectare of land privately for the purposes ofresettling certain affected individuals.Offtake arrangements. We have not entered into offtake arrangements with respect to power generated by theRampur Project. However, pursuant to Government policies, we are required to supply 12% of the aggregatepower generated by the Rampur Project, when completed and operational, to the state of Himachal Pradesh freeof-charge,1% will be supplied to a state-established local development fund for the purposes of providing aregular stream of revenue for income generation and welfare schemes, creation of additional infrastructure andcommon facilities on a sustained and continued basis over the life of the project. Out of the remaining 87% ofpower which is expected to be generated by the Rampur Project, 30% will be supplied to the state of HimachalPradesh at the tariff rate set by the CERC in accordance with prevailing tariff policies and regulations. Weexpect all remaining power generated by us to be allocated by the MoP to various states or union territories inthe Northern region of India in accordance with a predetermined formula.We expect to charge for supplies of electricity based on tariffs which are set by the CERC in accordance withtariff policies and regulations currently in force. For a description of prevailing tariff policies, see the sectiontitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations – FactorsAffecting Our Financial Condition and Results of Operations” on page 129.Project cost estimates and financing arrangements. As at December 31, 2009, we have spent approximatelyRs.8,314.2 million in aggregate on the construction of the Rampur Project. In January 2007, we obtained CCEAapproval for estimated project costs of an aggregate of Rs. 20,470.3 million.The Rampur Project is expected to be financed through equity contributions by the state of Himachal Pradeshand the Government in the proportion of 30:70, as well as through debt financing. Of the total project costs,30% is expected to be funded through equity contributions, and the remaining 70% is expected to be fundedthrough debt financing. In September 2007, we obtained World Bank funding of US$400 million in connectionwith this project. For details see section titled “Financial Indebtedness” and “Risk Factors—Internal RiskFactors- Risks Relating to Our Business—We are dependent on external sources of funding for ourexpansion plans and we may not be able to obtain financing for our projects on commercially acceptableterms” on pages 123 and xxx respectively.68

Power evacuation. Power generated by the Rampur Project is expected to be evacuated from a 400 KV GISswitchyard through an already existing double-circuit 400 KV transmission line connecting the NJHPS with theNalagarh sub-station of PGCIL in Himachal Pradesh, through a loop-in, loop-out circuit expected to be locatedat Duttnagar. This transmission line transmits power to the Northern grid.Procurement. Through international competitive bidding processes, we awarded the following main contractswith respect to the construction of the Rampur Project:Type of contract awarded Contractor Estimated Contract ValueCivil worksCivil works (including hydromechanicalworks)joint venture of Gammon India (India) andPatel Engineering Limited (India)joint venture of Gammon (India) and PatelEngineering Limited (India)Rs. 3,824.4 millionUS$9.1 millionRs. 3,642.6 million¥359.1 million€0.5 millionElectro-mechanical works BHEL (India) Rs. 5,356.5 million€15.5 millionApprovals/Clearances. For a description of the approvals and clearances obtained with respect to the RampurProject, see section titled “Government and Other Approvals” on page 161.Awards/Qualifications. We have obtained the following ISO qualifications and awards with respect to theRampur Project:Awarding Organization Award/Qualification Date of award CategoryBureau of Indian Standards ISO 14001:2004 March 31, 2009 Environmental ManagementBureau of Indian Standards ISO 18001:2007 March 31, 2009 Occupational Health & Safety ManagementSystemsBureau of Indian Standards ISO 14001:2004 March 31, 2009 Environmental Management SystemsTUV SUD Management ServiceGmbHGreentech FoundationGreentech FoundationGreentech FoundationISO 9001:2000 January 28,2008Environment Excellence Award(Silver)Environment Excellence Award(Bronze)Environment Excellence Award(Bronze)October 12,2009Quality Management SystemsEnvironmental Management2007 Environmental Management2006 Environmental ManagementProjects under DevelopmentThe following table sets out a summary of our existing pipeline of projects which are currently in various stagesof development or implementation:ProjectState/CountryAnticipatedInstalled Capacity Status as of December 31, 2009Luhri (1) Himachal Pradesh, India 775 MW Detailed project report submitted to the CEA onNovember 29, 2008. This was resubmitted onSeptember 9, 2009 with further geological data asrequested by the CEA.Dhaulasidh (2) Himachal Pradesh, India 50 MW (3) Feasibility study report submitted to the stategovernment of Himachal Pradesh on August 31,2009.Devsari Uttarakhand, India 252 MW Detailed project report submitted to the CEA onJanuary 14, 2009. Further geological explorationscurrently being undertaken pursuant to commentsreceived from the CEA on April 21, 2009.69

ProjectState/CountryAnticipatedInstalled Capacity Status as of December 31, 2009Naitwar Mori Uttarakhand, India 60 MW (4) Detailed project report submitted to the stategovernment of Uttarakhand on July 17, 2008.Jakhol Sankri Uttarakhand, India 51 MW (4) Detailed project report under preparation.Arun-III Nepal 900 MW Feasibility study report submitted to the CEA onSeptember 30, 2009.Tipaimukh (5) Manipur, India 1,500 MW In negotiations with respect to the establishment ofthe joint venture company.Total anticipated installedcapacity3,588 MWNotes:(1) This project will be constructed by a special purpose vehicle to be established between our Company and the state of HimachalPradesh, in which we have agreed to take a 51% equity interest and the state of Himachal Pradesh has agreed to take a 49% equityinterest.(2) Pursuant to the terms of the agreement awarding us the right to develop, construct, own and operate the Dhaulasidh Project, the stategovernment of Himachal Pradesh will own a 49% interest in this project. The method by which this allocation will be achieved iscurrently under review by our Company.(3) A revised feasibility study report has been prepared with respect to this project which revises the proposed installed capacity from theoriginal 50 MW to 66 MW. This is currently under management review.(4) Based on the letters of approval issued by the state government of Uttarakhand for each relevant project.(5) This project will be developed by a joint venture company to be established in which we have agreed to take a 26% equity interest,with NHPC Limited and the state of Manipur taking a 69% and 5% equity interest respectively. This project was originally awarded tothe North Eastern Electric Power Corporation and is in the process of being transferred, pursuant to minutes of meeting dated July 6,2009 of the MoP whereby it was determined by the Government that the project would be developed by the joint venture company to beestablished by NHPC Limited, the state of Manipur and our Company. See “Risk Factors—Internal Risk Factors- Risks Relating toOur Business—Some projects which may have originally been awarded to us, may be transferred to other of our competitors by theGovernment or state governments” on page xxii.Luhri Project. The proposed 775 MW Luhri Project is expected to be located on the Sutlej River, downstreamfrom the Rampur Project, and is a run-of-the river project, with pondage for diurnal peaking. We signed amemorandum of understanding with the state government of Himachal Pradesh in connection with the LuhriProject in October 2008, and submitted the detailed project report for this project to the CEA in November2008. Pursuant to the terms of the memorandum of understanding, the Luhri Project will be developed andoperated by a joint venture company to be established, in which each of the Government (through the Company)and the state government of Himachal Pradesh (partly through the Company and partly itself) has agreed to takea 51% and 49% effective interest, respectively, to be effected through our Company and through directissuances of shares in such joint venture company to the state government of Himachal Pradesh. Wesubsequently received comments from the CEA which requested that further geological investigations beconducted on the project site. We re-submitted the detailed project report, along with the requested informationin September 2009. We commenced the land acquisition process for this project in April 2007.Based on the detailed project report submitted to the CEA, when completed, the power station is expected tohave a designed annual energy generation capacity of 3,117 MU in a 90% dependable year based on 95% plantavailability. Based on certain assumptions and parameters as set forth in the detailed project report, weanticipate that the construction of the Luhri Project will take approximately 90 months from the date on whichconstruction commences, at an estimated cost of approximately Rs. 47,950.00 million. As of December 31,2009, we have incurred expenses of approximately Rs. 509 million in connection with the development of thisproject. We have not entered into any offtake or financing arrangements with respect to this project, although weare currently in discussions with the World Bank for the financing of the construction works on this project.Under the memorandum of understanding awarding us the right to develop, own and operate the Luhri Project,we are required to establish a special purpose vehicle to develop, own and operate the Luhri Project within sixmonths of the date of the memorandum, or by March 26, 2009. We have not established the special purposevehicle relating to the Luhri Project as at the date of this Red Herring Prospectus. In addition, upon theconclusion of the Offer, we will not be able to comply with the provisions of the agreement for the Luhri Projectwhich provide for equity in the project company to be held in the proportions 51:49. See “Risk Factors—70

Internal Risk Factors- Risks Relating to Our Business—We may be in breach of certain of our obligationswith respect to the Luhri Project” on page xv.Dhaulasidh Project. The proposed 50 MW Dhaulasidh Project is expected to be located on the Beas river in theHamirpur district of Himachal Pradesh, and is a run-of-the-river project. We signed a memorandum ofunderstanding with the state government of Himachal Pradesh in connection with the Dhaulasidh Project inOctober 2008, and submitted a feasibility study report to the state government of Himachal Pradesh in August2009. Under the terms of the agreement awarding us the right to develop, construct and operate the DhaulasidhProject, the state government of Himachal Pradesh will own a 49% interest in this project. The method by whichthis allocation will be achieved is currently under consideration by our Company. We are currently in theprocess of preparing a revised feasibility study report for this project, to increase the estimated installed capacityfrom the original 50 MW to 66 MW, based on the results of surveys and investigations which have been carriedout by us on the project site. We are also carrying out detailed investigations and drilling and drifting work onthe project site in connection with our preparation of a detailed project report. We have identified the landrequired for the project, and are currently in the process of preparing documentation required for the landacquisition process.Based on the feasibility study report submitted to the state of Himachal Pradesh for a 50 MW scheme, whencompleted, the power station is expected to have a designed annual energy generation capacity of 193 MU in a90% dependable year based on 95% plant availability. Based on certain assumptions and parameters as set forthin the feasibility study report, we anticipate that the construction of the Dhaulasidh Project will takeapproximately 36 months from the date on which construction commences, at an estimated cost ofapproximately Rs. 4,034 million. As of December 31, 2009, we have incurred expenses of approximately Rs.22.7 million in connection with the development of this project. We have not entered into any offtake orfinancing arrangements with respect to this project.Devsari Project. The proposed 252 MW Devsari Project is expected to be located on the Pinder river in theChamoli district of Uttarakhand, and is a run-of-the-river project with diurnal pondage. This was originallyconceptualized as a 300 MW storage dam project, but was amended to the current scheme due to oppositionfrom local communities. See “Risk Factors—Internal Risk Factors- Risks Relating to Our Business—Thedevelopment of hydroelectric power projects may be subject to unexpected complexities and delays, whichmay cause the actual timeframes of such project development to differ significantly from original estimates”on page xxvii. In November 2005, we executed an implementation agreement with the Government ofUttarakhand in connection with the Devsari Project. We submitted a detailed project report to the CEA inJanuary 2009. In April 2009, we received comments from the CEA which requested our Company to undertakenfurther geological investigations at the project site by the construction of exploratory drifts at dam abutmentsand the proposed powerhouse location. We are currently in the process of conducting these additional geologicalinvestigations. We have identified the land required for the project, and are currently in the process of preparingdocumentation required for the land acquisition process.Based on the detailed project report submitted to the CEA, when completed, the power station is expected tohave a designed annual energy generation capacity of 910.16 MU in a 90% dependable year based on 95% plantavailability. Based on certain assumptions and parameters as set forth in the detailed project report, weanticipate that construction of the Devsari Project will take approximately 5 years from the date on whichconstruction commences, at an estimated cost of approximately Rs. 13,408.60 million. As of December 31,2009, we have incurred expenses of approximately Rs. 164.4 million in connection with the development of thisproject. We have not entered into any offtake or financing arrangements with respect to this project.Naitwar Mori Project. The proposed 60 MW Naitwar Mori Project is expected to be located on the Tons river inMori Tehsil, the Uttarkashi district of Uttarakhand, and will be a run-of-the-river project. In November 2005, weexecuted an implementation agreement with the state government of Uttarakhand in connection with theNaitwar Mori Project, and in July 2008, we submitted the detailed project report in connection with this projectto the state government of Uttarakhand, which was approved in March 2010.Based on the detailed project report approved by the state government of Uttarakhand, when completed, thepower station is expected to have a designed annual energy generation capacity of 265.50 MU in a 90%dependable year based on 95% plant availability. Based on certain assumptions and parameters as set forth inthe detailed project report, we anticipate that the construction of the Naitwar Mori Project will takeapproximately 48 months from the date on which construction commences, at a cost of approximately Rs.4739.1 million. As of December 31, 2009, we have incurred expenses of approximately Rs. 98.3 million in71

connection with the development of this project. We have not entered into any offtake or financingarrangements with respect to this project.Jakhol Sankri Project. The proposed 51 MW Jakhol Sankri Project is expected to be located on the Supin riverin Purola Tehsil, the Uttarkashi district of Uttarakhand, and will be a run-of-the-river project. In November2005, we executed an implementation agreement with the state government of Uttarakhand with respect to thisproject. In July 2007, the CEA approved the commercial viability of this project with an original capacity designof 33 MW. We subsequently changed the project layout as a result of environmental concerns since the originaldesign would have required part of the project to be located within the boundaries of a wildlife sanctuary, and asa result of such changes, the proposed design capacity was increased from the original 33 MW to 51 MW. Weare currently preparing the detailed project report to be submitted to the state government of Uttarakhand inconnection with the project.Based on our current estimates, upon completion, the power station is expected to have a designed annualenergy generation capacity of 219.99 MU in a 90% dependable year based on 95% plant availability. Based oncurrent project estimations, we anticipate that the construction of the Jakhol Sankhri Project will takeapproximately 42 months from the date on which construction commences, at an estimated project cost of Rs.3,585.80 million. As of December 31, 2009, we have incurred expenses of approximately Rs. 8.3 million inconnection with the development of this project. We have not entered into any offtake or financingarrangements with respect to this project.Arun-III Project. The proposed 900 MW Arun-III Project is expected to be located on the Arun river in theSankhuwasabha district of Nepal, and will be a run-of-the-river project. In March 2008, we executed amemorandum of understanding with the Nepalese government with respect to the Arun-III Project. Pursuant tothe terms of the memorandum of understanding, we are required to complete our preconstruction works within30 months of the issuance of the requisite survey licence by the Nepalese government, and to complete theconstruction and commissioning of the Arun-III project within 60 months of the issuance of the requisitegeneration license by the Nepalese government. We have submitted the feasibility study report for this project tothe CEA in September 2009, and are in the process of preparing the detailed project report to be submitted inconnection with this project.Based on the feasibility study report submitted to the CEA, when completed, the power station is expected tohave a designed annual energy generation capacity of 3,970.0 MU in a 90% dependable year based on 95%plant availability. Based on certain assumptions and parameters as set forth in the feasibility study report, weanticipate that construction of the Arun-III Project will take approximately five years from the date on whichconstruction commences, at an estimated cost of approximately Rs. 44,600.0 million. As of December 31, 2009,we have incurred expenses of approximately Rs. 347.1 million in connection with the development of thisproject. We have not entered into any offtake or financing arrangements with respect to this project. In addition,pursuant to the terms of the memorandum of understanding with the Nepalese government, we are required tosupply 21.9% of our annual power generation from the Arun-III Project to the Nepalese government free-ofcost.Tipaimukh Project. The proposed 1500 MW Tipaimukh Project is expected to be located on the Barak river inthe Churachandpur district of Manipur, and is a multipurpose storage hydropower project, which has also beendesigned to perform flood management functions. This project was originally awarded to the North EasternElectric Power Corporation, or NEEPC, in July 1999, and the memorandum of understanding was executedbetween NEEPC and the state government of Manipur in connection with this project. Under minutes ofmeeting dated July 6, 2009 issued by the MoP, the MoP has agreed that the Tipaimukh Project will be handedover by the NEEPC to a joint venture company to be established by the state government of Manipur, NHPCLimited and ourselves, in which we have agreed to take a 26% equity interest, and NHPC Limited and the stategovernment of Manipur have agreed to take a 69% and 5% equity interest, respectively. A list of the projectassets and liabilities to be taken over by the joint venture company in connection with the Tipaimukh Project iscurrently being prepared by the NEEPC, and is subject to mutual agreement between the joint venture partnersand the NEEPC. We are also currently in the midst of negotiating the memorandum of understanding withNHPC Limited and the state government of Manipur in connection with the establishment of the joint venturecompany. See “Risk Factors—Internal Risk Factors- Risks Relating to Our Business—Some projects whichmay have originally been awarded to us, may be transferred to other of our competitors by the Government orstate governments” on page xxii.72

Other BusinessesPower TransmissionIn June 2009, we entered into a memorandum of agreement with Infrastructure Leasing & Financial ServicesLtd, or ILFS, the Power Grid Corporation of India Limited, or PGCIL, and PTC Financial Services Ltd, or PTC,for the establishment of a joint venture to construct and maintain the Indian part of a transmission lineconnecting Nepal and India. Pursuant to the terms of the memorandum of agreement, we have agreed to take a26% equity interest in the joint venture, with ILFS, PGCIL and PTC taking equity interests of 37%, 26% and11%, respectively.We are currently negotiating with each of the joint venture parties with respect to the terms which will governthe joint venture.Project Advisory and Consultancy ServicesWe intend to leverage our experience in developing and constructing the NJHPS into developing a projectadvisory and consultancy service business. To this end, we have established a dedicated consultancy division forthe purposes of providing advisory and consultancy services in the hydropower sector. In 2009, we wereappointed by the Government to prepare detailed project reports with respect to two hydroelectric powerprojects which are proposed to be located in Bhutan, namely, the proposed 900 MW Wangchu Project, a storagescheme project which is expected to be located on the Wangchu river and the 486 MW Kholongchu Project, arun-of-the-river project which is expected to be located on the Kholongchu river. Upon the completion of thedetailed project reports for these projects, we intend to request that the construction and operation of theseprojects be allocated to us.We have also provided advisory and consultancy services to a railway corporation with respect to the design ofrailway tunnels and have carried out geological investigations in connection therewith. Going forward, weintend to expand our advisory and consultancy business to cater to corporations operating in the hydroelectricpower, road/railway infrastructure and other related industry sectors to which our experience is applicable.Environmental and Social ResponsibilityWe are committed to developing our hydroelectric power projects in a technologically efficient andenvironmentally and socially responsible manner, with the objective of minimizing the impact of our projects onthe surrounding environment and communities.Environmental complianceWe have adopted a biodiversity conservation policy in conjunction with our environmental managementpolicies. Our environmental management activities are supervised by a separate environment departmentestablished for that purpose. Under our biodiversity conservation policy, we have committed to, among others,discharging our environmental obligations under national and state legislation and regulations, operating in anenvironmentally responsible manner so as to minimize the impact of our operations on the environment, takinginto consideration environmental and community impact as an integral part of the decision-making process,developing and maintaining adaptive environment management mechanisms for the establishment andmaintenance of environmental objectives, responding promptly and effectively to known significantenvironmental impacts arising from our operations, liaising closely with regulators, authorities andenvironmental organizations, educating and training our employees to conduct their activities in anenvironmentally responsible manner, and managing land within our control with due care.In connection with our environmental management activities, we have adopted certain monitoring andsupervision guidelines applicable to the project construction phase and the operational phase, respectively. Wehave also undertaken several initiatives with respect to the NJHPS and the Rampur Project, in line with ourobligations under the approvals obtained by us from the Ministry of Forest and Environment. For example, wehave undertaken the reforestation of approximately 342 hectares of degraded forest land at an aggregate cost ofRs. 32.0 million in connection with the NJHPS, allocated approximately Rs. 295.7 million for the managementof the catchment area for the NJHPS and approximately Rs. 233.7 million for the Rampur Project, with theobjective of preventing excessive silt build-up within the catchment area through measures such as afforestation,pasture development, soil stabilization and erosion and landslide protection works. As of December 31, 2009,73

we have also made provisions of approximately Rs. 385.5 million and Rs. 455.2 million for the NJHPS and theRampur Project respectively, for the purposes of reclamation and rehabilitation for dumping areas, statutoryenvironmental monitoring and independent third party environmental monitoring, as well as for sustenance andenhancement of fishery stocks in the affected areas.We have also commissioned several environmental studies in compliance with our obligations under theapprovals obtained by us from the Ministry of Forest and Environment, such as studies on the sustainabledevelopment of flora, fauna, ecological requirements and local community effects in connection with thediversion of the Sutlej River for the NJHPS, managed river flow studies for the Rampur Project, studies onterrestrial biodiversity for the Rampur Project and cumulative impact assessment studies in connection with theRampur Project. We have also commissioned the preparation of a comprehensive catchment area treatment planfor the Sutlej territory from the Environment Information Centre. We have also engaged environmentalconsultants in connection with our environmental management activities.In recognition of our efforts, we have obtained several awards for our environmental management activities,including awards from the Greentech Foundation and the Jawaharlal Nehru Memorial for environmentalexcellence and ecological implementation (in addition to awards obtained with respect to specific projects suchas the NJHPS and the Rampur Project).Resettlement and RehabilitationOur resettlement and rehabilitation policies aim to provide affected communities in our project areas withadequate rehabilitation packages beyond pure monetary compensation. This includes the active two-wayparticipation of affected individuals with us in deciding their compensation packages, compensation for affectedindividuals who do not have legal or recognized rights over the land on which they depend for subsistence,continuity in livelihood options after resettlement, training and education programs for local communities,improving access to medical facilities and services, expeditious implementation of the rehabilitation process andtaking into consideration special considerations for vulnerable sections of society.We have adopted guidelines and policies with respect to the implementation of our resettlement andrehabilitation programs, and tailor each such program on a project-by-project basis, based on specific localrequirements and customs and in consultation with affected individuals. While the government of the state inwhich the project is located is ultimately responsible for disbursing compensation to affected individuals, wealso monitor the status of such disbursements in order to ensure that displaced or affected communities receivetheir entitlements in a timely manner. For example, in October 2007, we engaged third party consultants toensure the timely disbursement of such entitlements to affected individuals. We also undertake direct initiativesaimed at benefiting local communities in the vicinity of our projects, and endeavor to involve them in ourdecision making process.Examples of our ongoing local community initiatives include the following which were undertaken with respectto the NJHPS:• The development of a 20-bed project hospital at Jhakri and medical dispensaries at Jeori and Nathpavillages;• Free medical care, vaccination and immunization for all local villages in the project area;• Monetary donations to the state hospital located at Rampur for improvements;• Mobile health service for project affected villages located in Shimla and Kinnaur districts;• Organization of veterinary, horticulture, agriculture and educational camps and programs for villagers;• Distribution of agricultural and horticultural equipment to villagers and• Establishment of a micro-assistance scheme whereby financial assistance of up to Rs. 20,000 per family isprovided for the purposes of establishing business enterprises.We have also undertaken measures to improve existing transportation infrastructure and facilities in the projectarea, as well as provided financial and other support for the improvement and construction of educational74

facilities. Our efforts in this regard have been monitored by the World Bank Mission on an ongoing basis as acondition of World Bank funding for the NJHPS, and we have received positive feedback from the World BankMission on our local community initiatives.CompetitionBased on information published by the CEA, as of November 30, 2009, the aggregate installed capacity ofhydroelectric projects in India was approximately 36,878 MW, of which our installed capacity of 1500 MW atthe NJHPS represented 4.06% of aggregate installed capacity in India. We believe that our major competitors inthe hydroelectric energy sector are Government-linked enterprises such as NHPC Ltd and Bhakra BeasManagement Board, state-owned electricity generation companies such as Maharashtra State Power GenerationCo. Ltd, Andhra Pradesh Generation Company and Tehri Hydro Development Corporation Limited, andindependent power producers such as Jaiprakash Power Ventures Limited. Due to the historical imbalancebetween demand and supply in the Indian power sector, there has generally been stable demand for powerwithin India. However, the regulation of the power sector in India is evolving, with the sector being liberalisedthrough statutory enactments such as the Electricity Act, 2003, which removes licensing requirements forthermal generators, provides for open access to transmission and distribution networks and removes restrictionson the right to build captive generation stations. These reforms provide opportunities for increased private sectorinvolvement in power generation. Specifically, open access reforms, by which power generation companies willbe able to sell their output directly to distribution companies, open access consumers, trading licensees andenergy exchanges.The Electricity Act 2003 did not affect the approval process and requirements for hydropower projects.However, we believe that the liberalization and open access initiatives for other power producers may lead toincreased investment in electricity generation, and would have knock-on effects on competition in thehydroelectric sector with respect to electricity demand in the future.Research and DevelopmentResearch and development is key to our continued success in engineering and construction. Our research anddevelopment activities are focused on anticipating our future needs and making us more competitive. We alsoseek to implement the latest technological advances and developments at our project sites. Our research anddevelopment activities are concentrated primarily on studies for elongation of operating life of underwatercomponents, such as turbines, by mitigating silt erosion.Clean Development Mechanism SchemeWe have applied for benefits with respect to the Rampur Project under the clean development mechanism,(CDM) scheme established pursuant to the hydro Protocol of the United Nations Framework Convention onClimate Change, or the UNFCC.The CDM scheme is an arrangement under the Kyoto Protocol allowing industrialised countries with agreenhouse gas reduction commitment to invest in ventures that reduce emissions in developing countries as analternative to more expensive emission reductions in their own countries. A crucial feature of an approved CDMcarbon project is that it has established that the planned reductions would not occur without the additionalincentive provided by emission reductions credits, a concept known as “additionality.”The CDM allows net global greenhouse gas emissions to be reduced at a much lower global cost by financingemissions reduction projects in developing countries where costs are lower than in industrialized countries. Withcosts of emission reduction typically much lower in developing countries than in industrialised countries,industrialised countries can comply with their emission reduction targets at much lower cost by receiving creditsfor emissions reduced in developing countries as long as administration costs are low.An industrialised country that wishes to get credits from a CDM project must obtain the consent of thedeveloping country hosting the project that the project will contribute to sustainable development. Then, usingmethodologies approved by the CDM Executive Board, the industrialised country applicant must establish thatthe carbon project would not have happened anyway, and must establish a baseline estimating the futureemissions in absence of the registered project. The application is then validated by a third party agency, called adesignated operational entity, or a DOE, to ensure the project results in real, measurable, and long-termemission reductions. The CDM Executive Board then decides whether or not to approve and register the project.75

If a project is registered and implemented, the CDM Executive Board issues credits to project participants,called certified emission reductions, or CERs. These are also commonly known as carbon credits, where eachunit is equivalent to the reduction of one metric tonne of carbon dioxide or its equivalent. The number of creditsissued in respect of a particular project is based on the monitored difference between the baseline and the actualemissions, as verified by the relevant DOE.Our Company will be exploring potential carbon finance opportunities with respect to future developmentalprojects. We have also made an application for CERs in connection with the Rampur Project. We appointedEmergent Ventures to prepare the project design document in connection with this application, which wassubmitted in 2009 to the CDM Executive Board and in 2009 to the MoEF for the required host countryapprovals. Bureau Veritas Certification India Pvt. Ltd has been appointed as the DOE with respect to theRampur Project application, and together with representatives of the Carbon Finance Unit of the World Bank,have inspected the project site and submitted a draft validation report.Certain non-governmental organizations have opposed our application for CERS with respect to the RampurProject. See “Risk Factors—Internal Risk Factors- Risks Relating to Our Business—We may face oppositionfrom local communities and other non-governmental organizations in connection with our construction andoperation of hydroelectric power projects, which may delay or otherwise hinder the construction ordevelopment of such projects or negatively affect our corporate image” on page xxix.Human ResourcesAs of December 31, 2009, we had 1,801 full-time employees based at our Company’s various projects and atour head and regional offices located in Shimla and Delhi, respectively. In addition, we also employ contractlabourers at our power projects and the number of such contract labourers vary from time to time based on thenature and extent of work contracted to independent contractors.The following table shows the function and number of our employees as of December 31, 2009:FunctionNumber of EmployeesAdministration............................................................................................... 143Human resources ........................................................................................... 109Legal ............................................................................................................. 10Information technology................................................................................. 21Accounting and finance................................................................................. 90Operations and maintenance ......................................................................... 610Others ............................................................................................................ 818Total .............................................................................................................. 1,801Our employees are organized into two unions and three associations, under two collective bargainingagreements. We have maintained good relationships with these unions and associations, and have notexperienced any labour disruptions or strikes at our operations.We have previously experienced shortages of skilled employees, such as engineers. See “Risk Factors—Internal Risk Factors- Risks Relating to Our Business—We are dependent on our management team, skilledpersonnel and our ability to attract and retain such personnel” on page xxxv. To address such shortages, weimproved our recruitment drives and initiatives, for example, through increasing the number of trainingscholarships available to potential new employees. We also encourage continuing education of our executivestaff and our operational and maintenance staff through conducting in-house training programs at our officesand project sites, as well as through off-site educational programs conducted by other educational institutions.We have also established an in-house training institute, the Hydropower Training Institute, Kotla, for thepurposes of training newly recruited employees in engineering and other technical skills and practices, as well asfor conducting in-house and other training programs for our existing employees. We intend to offer ouremployees comprehensive on-going training in order to raise their competence and quality with respect tohydropower operations, and to improve competencies in functional skills.We have undertaken various initiatives to improve our relationships with our employees and to align theirobjectives with those of our Company, including through introducing comprehensive feedback systems,productivity enhancement incentives and schemes and performance management and evaluation systems. We76

have also introduced a gender equity initiative and competency mapping, and have implemented comprehensivestaff welfare schemes, including employee health and social security schemes.Health and SafetyWe have implemented work safety measures and standards to ensure healthy and safe working conditions,equipment and work systems for all employees at the NJHPS and the Rampur Project. We have established adepartment for work safety and health measures which sets safety measures and standards in accordance withrelevant safety laws and regulations in India, and overseas the implementation and compliance of these safetymeasures and standards.We adopt fail-safe technology for all our plant, machinery and equipment which we believe to be in line withinternational standards of industrial safety. The NJHPS incorporates emergency shutdown and safety systemsfor the smooth and safe cessation of operations in abnormal conditions.We believe in educating our operational staff about safety procedures. Our operational employees are requiredto undergo safety training and pass safety examinations. Our operational employees work in 3 shifts of 8 hoursto oversee the operation of our equipment, which runs for 24 hours a day, 365 days a year.InsuranceWe require our contractors to obtain insurance during the construction phase, including third party insurancewith respect to risks associated with assets and infrastructure that are ancillary to our projects during theconstruction phase, such as cargo, contractor all-risk, workers compensation, employers’ liability and third partyliability. We do not obtain insurance for risks which are required to be insured against by our contractorspursuant to their contractual obligations.The terms of our existing financing also require that we obtain certain insurance, and the terms of any futurefinancing may require similar insurance to be undertaken with respect to our operations or projects. Thefollowing table sets out the major insurance policies which we have obtained with respect to our operations(excluding insurance policies relating to our employees which are further described elsewhere in this RedHerring Prospectus):Insurer Type of Insurance Insured Value Assets covered Validity PeriodNational InsuranceCompany Limited(lead insurer)New India Assurance(co-insurer)Reliance GeneralInsurance (co-insurer)Industrial all risk policySection I (Material Damage) fire andspecial perils, burglary etcNJHPSApril 1, 2010 toJune 30, 2010Rs. 45,350 million All civil works of theNJHPS exceptexcluded itemsRs. 2,230 million Gates, hoist and otherassociated equipmentof the NJHPSRs. 21,020 million Plant and machineryand other foundationequipment, includingall communicationequipment at variouslocationsRs. 20 million Express air-freightRs. 20 million Professional feesRs. 20,920 million Machinery breakdownRs. 82,650 million Terrorism coverRs. 14,050 million Gross profit for FLOP77

Our insurance coverage may not be adequate to cover all risks relating to our operations. See “Risk Factors—Internal Risk Factors- Risks Relating to Our Business—We may not have adequate insurance coverage” onpage xxxiii.Properties and Fixed AssetsIn addition to project land on which our projects are situated, we also own or lease several office properties inconnection with our operations. Our registered and corporate office is located at Himfed Building, New Shimla,171 009, Himachal Pradesh, India, which is a leasehold property. The following table sets forth details of ourmaterial office properties (other than project sites):Address Owned/Leased Duration of Lease Lease expiry dateHimfed Building, NewShimla, Himachal PradeshIrcon InternationalBuilding, Plot C-4, DistrictCentre Saket, New Delhi110017Leasehold 6 years January 1, 2014Leasehold 5 years July 31, 2012In addition to the above, we have also leased several properties in Shimla for use as offices and transit houses.With respect to land acquired for our project sites from private parties or the Government, we may enter intoprivate arrangements for the acquisition of such land, or may acquire such land pursuant to the terms of theLand Acquisition Act. Land acquired by us pursuant to the Land Acquisition Act is acquired upon payment ofcompensation which is determined by the Land Acquisitions Officer upon examination of the relevant land.We may also enter into certain arrangements with the Government for the utilization of forest lands for ourprojects. If the project site includes land which is designated as forest land, we are required to submitapplications to the Government pursuant to the provisions of the Forest (Conservation) Act 1980, through therelevant state forest department. We are not required to pay consideration for the use of such forest lands, butare required to abide by conditions imposed for such usage by the Government and pay certain compensation inconnection with the reafforestation of the forest land and the net present value of such forest land. Conditionswhich may be imposed on us by the Government may require us to carry out reafforestation activities onequivalent non-forest area, or on degraded forest land, as identified by respective state governments. The costsof such rehabilitation and reafforestation are included as part of the total project costs for each project, and aregenerally eligible for recovery as permitted capital expenditures under the electricity tariff regime.Intellectual PropertyWe do not presently own, nor have we registered, any intellectual property rights over our name and logo underthe Trademark Act 1999, and consequently do not enjoy the rights accorded thereunder with respect to the usageof our name and logo. See “Risk Factors—Internal Risk Factors- Risks Relating to Our Business—We havenot registered our trademark or logos under the Trademark Act 1999” on page xxix.78

KEY MATERIAL CONTRACTSA. Agreements1. Agreement between our Company and the GoHP for the Rampur ProjectWe have entered into an agreement with the GoHP dated October 20, 2004 ("Rampur Agreement") for thepurpose of building, owning, executing, implementing, operating and maintaining the Rampur Hydro ElectricProject (“Rampur Project”), which has an indicative capacity of 400-500 MW and is located downstream ofthe NJHPS.The key terms of the Rampur Agreement are disclosed below:Equity funding for the Rampur Project: It has been agreed that the equity funding for the Rampur Project ifrequired is to be contributed by the GoHP and GoI in the ratio of 30:70. Further, prior approval of GoI will berequired, if the overall equity of GoHP in our Company exceeds 25% of overall equity.Dividend sharing: The parties have agreed that the dividend shall be determined by the paid up equity shares ofthe GoHP and GoI in our Company.Project execution:• Board of our Company shall constitute a sub committee of the Board to look into issues like modalitiesfor absorption, modalities to deal with surplus staff and future recruitment and to look into grievances/appeals of employees relating to absorption of employees in the Company.• A state level committee under the chairmanship of the Chief Secretary will be set up by GoHP tofacilitate the execution of the Rampur Project.• By the virtue of our Company being a central public sector undertaking, all instructions related tofunctional directors including appointments would be guided by Department of Public Enterprises,Public Enterprises Selection Board and Appointment Committee of the Cabinet Regulations.Assignment: With the approval of the GoHP, we are permitted to assign or otherwise transfer our rights andbenefits, or any portion of our rights or benefits, but not our obligations under the Rampur Agreement to anyother person or entity for the purpose of arranging or re-arranging finance for the Rampur Project.Sharing of Power: 12% of the energy generated from the Rampur Project, after excluding auxiliary consumptionand transformation losses, will be provided to GoHP, free of cost, at the interconnection point of the powerstation with the Power Grid Corporation of India Limited ("PGCIL"). A further 1% will be supplied to a stateestablishedlocal development fund for the purposes of providing a regular stream of revenue for incomegeneration and welfare schemes, creation of additional infrastructure and common facilities on a sustained andcontinued basis over the life of the project. Further, in respect of the remaining 87% of the energy generated, theshare of GoHP will be the lower of either 30% or the percentage determined on the basis of the actual paid upcapital of GoHP in our Company.Transmission of Power: In consultation with CEA, we are obliged to cause PGCIL to provide a suitableintegrated transmission system, matching with the commissioning of the Rampur Project.Land Acquisition:• The GoHP has agreed to acquire the land for the construction, operation and maintenance of theRampur Project, at the expense of our Company. We have the right to purchase land through privatenegotiations. The ownership of such land, purchased or acquired will vest in our Company.• Further, GoHP will provide its land to the Company either on an ownership basis or on a long termbasis (coterminous with the life of the Rampur Project) for the purpose of permanent structures/ worksand the permanent colonies required for the construction, operation and maintenance of the RampurProject at the rates as per the prescribed procedure.79

• The GoHP will also lease its land to our Company on a short term basis if such land is required fortemporary colonies and temporary structures for the construction of the Rampur Project. Such land willbe leased initially for ten years and the same may be renewed by the GoHP at its discretion until suchperiod as may be required by the Company on terms and conditions determined by the GoHP.Obligations of Company with respect to the Environment: The Company inter alia has the followingobligations: (i) to pay the forest department of the GoHP the price of the trees that are felled or damaged in thesubmergence area during the execution of the Rampur Project at prevailing government rates. However, theGoHP is responsible for the felling and removing of the trees and will hand over the net proceeds obtained fromthe sale of the trees to the Company; and (ii) we are required to comply with the conditions laid down by theGoI and the MoEF in their environment and forest clearance orders.Resettlement and Rehabilitation: We are obligated to resettle and rehabilitate displaced persons in accordancewith the scheme set forth in the Rampur Agreement.2. Implementation Agreements between our Company and Government of Uttaranchal (now known asGovernment of Uttarakhand)Our Company has entered into three separate implementation agreements all dated November 21, 2005(collectively referred to as the "Implementation Agreements") with the Government of Uttaranchal (nowknown as Government of Uttarakhand) ("GoU") for the implementation of the following projects:(i)(ii)(iii)Jakhol Sankri Hydro Electric Project situated on the river Supin, District Uttarkashi, Uttarakhand("Jakhol Sankri Project "), with an indicative capacity of 33 MW;Devsari Hydro Electric Project situated on the river Pindar, Chamoli District, Uttarakhand ("DevsariProject"), with an indicative capacity of 300 MW; andNaitwar Mori Hydro Electric Project situated on the river Tons, Uttarkashi District, Uttarakhand("Naitwar Mori Project") with an indicative capacity of 33 MW.(Jakhol Sankri Project, Devsari Project and Naitwar Mori Project are collectively referred to as the "Projects")The GoU has allocated the Projects to our Company on a build, operate, own and maintain basis, subject totechno economic viability and clearances from the MoEF and CEA. The Implementation Agreements willautomatically be deemed to be void if clearance is not provided by the CEA. Further, any changes stipulated bythe CEA or any other authority are required to be incorporated in the Projects and we are required to complywith the same.The terms and conditions of the Implementation Agreements are similar and accordingly, their key terms aredisclosed below:Ownership of Projects: It has been agreed that the ownership of Projects will vest in our Company.Obligations of our Company: Our Company inter alia has the following obligations: (i) to carry out the survey,investigation and prepare the detailed project report including catchment area treatment plan and EIA study forthe Projects; (ii) to obtain all clearances, authorisations and approvals required for the implementation of theProjects. The GoU has agreed to provide necessary assistance in this regard.Financing: We are responsible for arranging necessary finances for the Projects in a timely manner.Resettlement and Rehabilitation: We are obligated to prepare and implement a scheme for the resettlement andrehabilitation of the displaced persons in accordance with the guidelines and approval of the GoU. TheCompany is required to ensure that the aforesaid scheme is not inferior to the National Policy on Rehabilitationand Resettlement, 2007.Land Acquisition : Upon a specific request of the Company, the GoU is obligated to acquire the land forProjects in accordance with the provisions of the Land Acquisition Act.80

Sharing of Power: 12% of the energy generated from the Projects, after excluding auxiliary consumption andtransformation losses, will be provided to the GoU. Further, the evacuation of power from the Projects will bedone through the integrated transmission / evacuation system being planned / developed by the CEA / CTU /STU after consultation with NREB and GoU. The section of the lines to be constructed to evacuate power uptonational grid point from the Projects is required to be mutually discussed and agreed between the Company andthe Transmission Corporation of GoU.Commissioning of the Projects: The Company is required to endeavour to commission the Projects prior toMarch 2012. Further, if the Company does not implement the Projects for any reason, it is required to hand overthe project to the GoU on "as is where basis" along with all reports and documents, on mutually agreed termsand conditions.Amended Capacities: By way of a Feasibility Study Report prepared by Lahmeyer International dated April2009 the installation capacity of the Jakhol Sankri Project has been revised to 51 MW.By way of a Feasibility Study Report prepared by Colenco Power Engineering Limited dated December 2008the installation capacity of the Devsari Project has been revised to 252 MW.By way of letter dated April 18, 2009 the GoU has approved the revision of the installation capacity of theNaitwar Mori Project to 60 MW.3. Power Purchase Agreements for the NJHPSOur company has entered into ten power purchase agreements (“PPAs”), for the offtake of power from NJHPS,with the beneficiaries in the Northern region as identified by the Government of India. The details of the PPAsare as follows:(1) PPA dated July 29, 2003 entered into with Power Development Department, Government of Jammuand Kashmir;(2) PPA dated February 28, 2003 entered into with Rajasthan Rajya Vidyut Prasaran Nigam Limited asamended on May 9, 2004 whereby the beneficiary was substituted by the distribution licensees ofRajasthan i.e. Ajmer Vidyut Prasaran Nigam Limited, Jaipur Vidyut Prasaran Nigam Limited, andJodhpur Vidyut Prasaran Nigam Limited;(3) PPA dated December 18, 2002 entered into with Engineering Department, Chandigarh Administration;(4) PPA dated October 31, 2005 entered into with GoHP;(5) PPA dated March 31, 2003 entered into with HPSEB;(6) PPA dated October 24, 2002 entered into with PSEB;(7) PPA dated December 22, 2005 entered into with Uttaranchal Power Corporation Limited;(8) PPA dated January 14, 2003 entered into with Haryana Vidyut Prasaran Nigam Limited;(9) PPA dated March 27, 2003 entered into with Delhi Transco Limited; and(10) PPA dated April 19, 2004 entered into with Uttar Pradesh Power Corporation Limited.Two of our PPAs, entered into with the Power Development Department of Jammu & Kashmir and the UttarPradesh Power Corporation Limited, respectively, have expired. The supply of power under these agreementscontinues on the same terms until such time as new agreements are entered into. See “Risk Factors— InternalRisk Factors- Risks Relating to Our Business—Certain of our power purchase agreements have expired” onpage xxix.The above parties are referred to as the “Bulk Power Customer” in their respective PPAs. The key terms of thesePPAs are almost similar and are provided below:Term: The term of our PPAs is 35 years with an exception of the PPA entered into with HPSEB which is for 40years and the PPAs entered into with the Uttar Pradesh Power Corporation Limited and Power DevelopmentDepartment, Government of Jammu and Kashmir which are for a period of 5 years.Share of power generated: The power generated at the NJHPS is shared in the following manner: (1) 12% ofgenerated power is supplied free of cost to GoHP (2) 1% will be supplied to a state-established localdevelopment fund for the purposes of providing a regular stream of revenue for income generation and welfareschemes, creation of additional infrastructure and common facilities on a sustained and continued basis over the81

life of the project (3) 25% of the remaining 87% is allocated to GoHP in lieu of 25% cost sharing in NJHPS, and(4) remaining 66% of power generated is at the disposal of the GoI in lieu of 75% cost sharing in the NJHPS.The power allocated to the GoI is allocated to various states in the Northern region on the basis of the formulaapproved by the GoI in February 1985 as amended from time to time.Tariff: The tariff of the power sold to the beneficiaries will be as determined by the CERC in accordance withthe tariff regulations.Payment, rebate and penalty: The payment of bills are to be made through a confirmed, revolving, irrevocableletter of credit to be established in favour of the Company for an amount equivalent to 105% of the averagemonthly billing of the preceding 12 months. If the bills are not paid by the Bulk Power Customer within a periodof 60 days from the date of the billing, the Company has the option to regulate the supply of energy to such BulkPower Customer in accordance with the directives / guidelines issued / to be issued by the GoI or CERC fromtime to time. The provision of surcharge and rebate shall be governed as per the notifications / directives /guidelines issued / to be issued by the GoI or CERC.Other key provisions and dispute resolution:• The generating units of the NJHPS are to be declared commercially operative by the Company inaccordance with the guidelines of GoI, CEA or the CERC;• The delivery point of the power generated is the 400 KV busbar or any other point designated at theNJHPS;• Metering arrangements are to be governed by the notifications / guidelines issued by CERC and relevantprovisions in Indian Electricity Grid Code; and• All disputes arising out of or in connection with PPAs are to be settled through arbitration. Arbitration shallbe done by a sole arbitrator, and in case of a disagreement on the appointment of an arbitrator, theChairman, CEA, shall appoint the sole arbitrator. In the event the Chairman, CEA, fails to appoint sucharbitrator, the arbitrator shall be appointed as per the provisions of the Arbitration and Conciliation Act,1996 (“Arbitration Act”). The arbitration shall be conducted in accordance with the provisions of theArbitration Act.4. Agreement dated December 22, 2009 between the Department of Energy, Royal Government ofBhutan and the CompanyAn agreement has been entered between the Department of Energy of Royal Government of Bhutan (“RGOB”)and the Company on December 22, 2009, for preparation of DPR for the Kholongchhu HEP in Bhutan(“Agreement”) by the Company in accordance with the terms of the Agreement. Further, as per the Agreement,the RGOB has the right to unilaterally terminate the Agreement by giving not less than 60 days prior writtennotice.5. Indemnity agreement dated April 6, 2009 between the Company and Power Grid Corporation ofIndia LimitedAn agreement dated April 6, 2009, was entered into between the Company and PGCIL on April 6, 2009(“Indemnity Agreement”). As per the terms of the Indemnity Agreement, PGCIL is responsible for setting upassociated transmission system (“ATS”) for evacuation of power from the hydro electric projects to becommissioned by the Company. In order to ensure that the hydro electric projects and the ATS arecommissioned simultaneously, the Company and PGCIL have agreed that in the event that PGCIL or theCompany default in the completion of the ATS or the construction of the projects respectively as per theschedule, then the defaulting party shall indemnify the non defaulting party to the extent of damages incurred bythe non defaulting party due to delay in commissioning by the defaulting party.For associated risk, see section titled "Risk Factors" on page xiii.82

B. Memorandums of Understanding and Memorandum of Agreement1. Memorandum of understanding between our Company and the GoHP for the Dhaulasidh ProjectThe GoHP and our Company have entered into a memorandum of understanding dated October 27, 2008("Dhaulasidh MoU") for the purpose of building, owning, executing, implementing, operating and maintainingthe Dhaulasidh Hydro Electric Project ("Dhaulasidh Project"). The Dhaulasidh Project has an indicativecapacity of 50 MW and is located in on river Beas, Hamirpur District in the state of Himachal Pradesh.The key terms of the Dhaulasidh MoU are disclosed below:Equity funding for the Dhaulasidh Project: The equity funds for the Dhaulasidh Project will be contributed inthe ratio of 51:49 by the GoI (through the Company) and GoHP (through the Company and individually)respectively. To achieve the same, funding will be provided by the Company from its internal accruals from theNJHPS and the differential amount will be subscribed and paid by GoHP, so as to bring the overall equitycontribution of GoHP in Dhaulasidh Project up to 49%.Financing for the Dhaulasidh Project: The Company is responsible for arranging necessary finances for theimplementation of the Dhaulasidh Project through loans, debentures, its own income from other projects or suchother sources that may be available.Power generated from the Dhaulasidh Project:• The Company will provide 12% of the energy generated from the Dhaulasidh Project (excludingauxiliary consumption and transformation losses), to GoHP, free of cost at the interconnection point ofthe power station with the PGCIL system (“12% Share”).• Of the remaining 88% of the energy generated at the bus bar of the Dhaulasidh Project, the share ofGoHP will be the lower of either 49% or the percentage determined on the basis of the actual paid upcapital of the GoHP in the Company.• Further 15% of 51% of the saleable energy which is available with MoP, GoI as unallocated powerduring the winter months i.e. from October to March, will be allocated as additional power to GoHPevery year at the bus bar rate for exclusive consumption in the state of Himachal Pradesh and will notbe available for sale.• Further, the Company is obligated to provide and earmark an additional 1% of the power generatedfrom the Dhaulasidh Project free of cost for the local area development fund which will be utilized forwelfare schemes, creation of additional infrastructure and common facilities etc on a sustained andcontinued basis over the life of the Dhaulasidh Project.• The GoHP may also provide 1% power from their 12% Share towards such corpus which will beoperated by a standing committee headed by an officer not lower than a deputy commissioner to bedesignated by GoHP.• Further, the Company has agreed to provide 100 units of electricity per month to each project affectedfamily for a period of 10 years from the date of commissioning of the Dhaulasidh Project.Resettlement and Rehabilitation: The Company is obligated to prepare and implement a scheme for theresettlement and rehabilitation of the displaced persons in accordance with the guidelines of the GoHP. TheCompany is required to ensure that the aforesaid scheme is not inferior to the National Policy on Rehabilitationand Resettlement, 2007.Implementation Agreement: The parties have agreed that the detailed terms and conditions of theimplementation agreement will be formulated with the mutual agreement of the GoHP and the Company afterformal constitution and effective operationalisation of the special purpose vehicle, if required.83

2. Memorandum of understanding between GoHP and the Company for the Luhri ProjectWe have entered into a memorandum of understanding with the GoHP ("Luhri MoU") dated October 27, 2008("Effective Date") for the purpose of building, owning, executing, implementing, operating and maintaining theLuhri Hydro Electric Project ("Luhri Project"), with an indicative capacity of 775 MW located downstream ofthe Rampur Project, through a special purpose vehicle ("Luhri SPV"). The Company has agreed to take steps toset up the Luhri Project, until the incorporation of the Luhri SPV.The terms and conditions of the Luhri MoU are similar to that of the Dhaulasidh MoU. For details see sectiontitled “Key Material Contracts” on page 79. However, there are some additional terms which are different andhave been set out below:Incorporation of the Luhri SPV: The Company is required to incorporate the Luhri SPV which will be asubsidiary of the Company. The shareholding of the Luhri SPV will be held by the GoI (through the Company)and GoHP (partly through the Company and partly directly itself) in the ratio of 51:49 respectively. The LuhriSPV was required to be incorporated within six months from the Effective Date. As on date of the Red HerringProspectus, the Luhri SPV has not been incorporated. For associated risks, see section titled "Risk Factors—Internal Risk Factors—Risks Relating to Our Business—We may be in breach of certain of our obligationswith respect to the Luhri Project" on page xv.Funding of the Luhri SPV: To achieve the aforesaid equity proportion, the Company has agreed to fund theequity for the Luhri SPV from its internal accruals from the NJHPS and the differential amount will besubscribed and paid by the GoHP, so as to bring the overall equity contribution of GoHP in Luhri Project up to49%.Purpose of the Luhri SPV: The purpose of the Luhri SPV is to build, own, execute, implement, operate andmaintain the Luhri Project and other such projects which may be allocated to the Luhri SPV by the GoHP.3. Memorandum of Understanding with the Government of NepalThe Government of Nepal (“GoN”), through its Ministry of Water Resources (“MoWR”), and our Companyhave on March 2, 2008 entered into a memorandum of understanding for the development of the Arun-III HydroPower Project (‘Arun-III Project’) on a build, operate, own and transfer basis (“MoU”). The estimatedinstalled capacity of Arun III Project is a minimum of 900 MW.The key terms of the MoU are set out below:Land and other information: The Company will be provided with all reports, information, documents and theland acquired for the purpose of the construction of the Arun III Project from the Nepal Electricity Authority(‘NEA’).Free power: In addition to the royalty and export tax (other than on free power and energy) applicable pursuantto the “(Nepalese) Hydropower Development Policy 2001” and “(Nepalese) Electricity Act 2049” (as publishedin Nepal Gazette in 1992) the Company will provide 21.9% of monthly generated power and energy from theArun III Project, net of auxiliary consumption and transformation losses, measured at bus-bar, free of cost to theGoN from the date of commercial generation.Licenses and other approvals:• On an application made by the Company, the GoN will grant a survey license to the Company whichshall remain valid for a period of 30 months from the date of issuance.• The Company will apply for the generation and transmission license along with relevant powerpurchase agreement(s), approved environmental impact assessment study, financial commitments, etc.,within the validity period of the survey license in accordance with the “(Nepalese) Electricity Act,2049” (as published in Nepal Gazette in 1992) and “(Nepalese) Electricity Regulations, 2050” (aspublished in the Nepal Gazette in 1993).• The GoN has agreed to grant the license for generation and transmission of electricity to the Companyfor a period of 30 years from the date of issuance of such license on a build, own, operate and transfer84

asis. At the end of such period, the project will be handed over by the Company to the GoN, free ofcost in a good running condition.• In the event the Company does not apply for the generation license or fails to meet the requirements forgrant of generation license, all documents, reports etc. submitted to MoWR shall remain as the propertyof GoN as per (Nepalese) Hydropower Development Policy, 2001.• GoN has agreed to facilitate all clearances and approvals required for the Arun-III Project and extendall privileges and facilities to the Company under the “(Nepalese) Electricity Act, 2049” (as publishedin Nepal Gazette in 1992), “(Nepalese) Electricity Regulations, 2050” (as published in the NepalGazette in 1993) and other prevailing laws of Nepal.Environment impact assessment: The Company will carry out the environmental impact assessment of the Arun-III Project in accordance with the “(Nepalese) Environment Protection Act, 2053” (as published in the NepalGazette in 1997), “(Nepalese) Environment Protection Rules, 2054” (as published in the Nepal Gazette in 1997)and other internationally accepted practices as an integral part of detailed engineering report.Completion of the project: The Company is responsible for the completion of the construction work within 60months from the date of financial closure to the commissioning of the project.Indemnity: In so far as the Company is responsible for the Arun- III Project, the Company has agreed toindemnify GoN in respect of all claims, proceedings, costs and damages arising out of or in relation to any suchmatter.Time of essence: Time is of essence and failure to accomplish the assignments prescribed in the MoU within thestipulated time limit for reasons other than force majeure shall render the MoU null and void.Assignability: The Company shall not assign its obligations under the MoU without prior approval of the GoN.The transfer of survey license shall not be allowed during its validity period.Amended Capacity: By a letter dated January 8 th 2010, the CEA has approved the revision of the installationcapacity of the Arun III Project to 900 MW.4. Memorandum of agreement with the IL&FS Energy Development Company LimitedThe Company has been allocated the development of Arun- III project in Nepal and the bulk of the powergenerated by Arun-III Project is envisaged to be exported to India. For such transmission of power to India, theCompany requires stable cross-border transmission interconnection for evacuation of power. Amongst otherefforts being made by the Company for setting up such cross-border transmission interconnection, , theCompany has entered into a memorandum of agreement with IL&FS dated June 25, 2009 (“Effective Date”) forrecording the intent of Company to subscribe to the equity of Cross Border Power Transmission CompanyPrivate Limited (“CPTC”) and the steps intended to be taken by the parties to set up cross border transmissionlines for evacuation of power (“MoA”). The CPTC was incorporated on December 19, 2006 for implementationof the Indian side of the transmission line for transmission of power from Nepal to India. As on June 25, 2009,100% of the equity of CPTC was held by IL&FS Infrastructure Development Corporation (“IL&FS IDC”) witha provision to disinvest its equity to the extent of 26% to NEA. Further the Power Grid Corporation of IndiaLimited (“PGCIL”) and PTC Financial Services have agreed, in principle, to subscribe to the equity of CPTC tothe extent of 26% and 11% respectively.The key terms of the MoA are set out below:Equity contribution: The Company has consented, in-principle to subscribe up to 26% of the equity of CPTC onthe terms and conditions similar to those agreed with PGCIL and PTC Financial Services for their respectivesubscription to the equity in CPTC.Steps for disinvestment: In order to give effect to the aforesaid equity contribution, the parties have agreed andconfirmed to take steps towards ensuring the requisite disinvestment of equity shares of CPTC by IL&FS IDC(presently holding 100% of CPTC’s equity shares) in commensuration with and to the extent the Company’ssubscription is accepted and subscribed by the Company at par.85

Terms of the joint development agreement: Parties have agreed and confirmed to execute a joint developmentagreement and other similar agreements with Power Grid Corporation of India Limited, as may be required, toformally record the understanding, conditions and framework in this regard and for the development of the Indo-Nepal transmission project.Subscription to equity of PTCN: The parties have agreed to explore the possibilities of Company’s subscriptionto equity capital of Power Transmission Company Nepal Limited (“PTCN”) which was incorporated onSeptember 16, 2007 for implementation of the Nepal side of transmission line. The equity of PTCN as on June25, 2009, was held in the ratio of 50:50 by IL&FS IDC and NEA with a provision that IL&FS IDC willdisinvest 24% equity to the banks and financial institutions of Nepal.Availment of resources: The parties have agreed to explore the possibilities of availing the professionalresources, expertise and services of IL&FS and the Company for achievement of financial closure of projects inNepal and Bhutan.Validity: This MoA is valid for an initial period of two years from the Effective Date unless mutually extendedby the parties or terminated by a party with a prior written notice of at least 30 days.5. Memorandum of Understanding dated March 15, 2010 between the Ministry of Power and theCompanyThe Company and the Government of India enter into a memorandum of understanding (“MoU”) every year.For the year 2010-2011, such MoU was entered on March 15, 2010.The MoU sets out certain performance targets to be achieved by the Company. Such performance targets interalia include parameters like net profit, net worth, gross sales, gross margin, construction milestones for pipelineprojects, gross energy generation, recovery of current dues etc. to be achieved by the Company.The MoU mentions five categories of ratings for performance evaluation. These are “Excellent”, “Very Good”,“Good”, “Average” and “Poor”. Against each of these categories, there are different performance targets to beachieved by the Company to fall under any of these categories.Further as per the terms of the MoU, the GOI has the following obligations:1. to delegate to the Company, all necessary powers as per guidelines/ instructions issued from time totime to similar corporations;2. to assist the Company in recovery of dues from SEBs and other beneficiaries who default in paymentor have not opened letter of credit of adequate amount in favour of the Company;3. to take up the revision of pay scales of the employees of the Company with effect from January 1,2007;4. to expedite the clearance from Ministry of Environment and Forests for the projects undertaken by theCompany to avoid delays in timely execution of the projects;5. to assist the Company in obtaining more projects in India and abroad; and6. to support the Company through the state governments for safety of the Company’s personnel and thehydro power equipments.Further as per the Office Memorandum no. 2 (70)/08-DPE(WC) dated November 26, 2008, from the DPE, theperformance related pay payable to the employees is directly linked to the performance of the Company underthe MoU.For associated risk, see section titled "Risk Factors" on page xiii.86

REGULATIONS AND POLICIES IN INDIAThe following description is a summary of certain sector specific laws and regulations in India, which areapplicable to the Company. The information detailed in this chapter has been obtained from publicationsavailable in the public domain. The regulations and policies mentioned below may not be exhaustive, and areonly intended to provide general information to the investors and are neither designed nor intended to substitutefor professional legal advice.The Power Sector“Electricity” falls within the Concurrent List of the Seventh Schedule to the Constitution of India. Therefore,both the Parliament of India (“Parliament”) and the State legislatures have the power to enact a law governingelectricity sector, provided that a State enactment does not conflict with any Central enactment on electricity.The Electricity Act, 2003 (“Electricity Act”)The Electricity Act was enacted by the Parliament to consolidate the laws relating to generation, transmission,and distribution of electricity. The Electricity Act also introduced ‘trading’ in electricity as a licensed activity inthe sector. It focused on the development of the electricity industry, promoting competition therein, protectinginterest of consumers, rationalisation of the electricity tariff, and ensuring transparency in tariff with respect tosubsidies granted by the governments. The Electricity Act repealed the Indian Electricity Act, 1910 (whichgoverned the transmission, supply and use of electricity), the Electricity (Supply) Act (which constitutedstatutory bodies at the central, regional and state levels to govern generation, transmission and distribution ofelectricity) and the Electricity Regulatory Commissions Act, 1998 (which constituted the Central and gave anoption to the State governments to constitute a State Electricity Regulatory Commission in their respectivestates). The Electricity Act came into force on June 10, 2003 and apply to the whole of India excluding the Stateof Jammu and Kashmir. In addition, it was notified that State enactments be applicable in the respective Statesto the extent such enactments are not inconsistent with the provisions of the Electricity Act. The GoI amendedcertain provisions of the Electricity Act on December 30, 2003 and thereafter in June 15, 2007.Authorities under the Electricity ActCentral Electricity AuthorityThe CEA was constituted under the repealed Electricity (Supply) Act, 1948 and its powers and functions wereamended under the Electricity Act. Under the Electricity Act, the concurrence of the CEA is required for settingup of a hydro power project where the scheme for the project is estimated to involve a capital expenditureexceeding such sum, as is fixed by the Central Government from time to time. The CEA consists of membersappointed by the GoI and it acts as an advisor to the Central Government on matters relating to the nationalelectricity policy, formulates plans for development and co-ordinates with planning agencies for optimal usageof resources. The CEA also specifies technical standards and safety requirements for electrical plants, lines andgrids.Electricity Regulatory CommissionsThe Electricity Act provides the functions and powers of CERC and a State Electricity Regulatory Commission(“SERC”) for each State. The CERC was originally constituted under the repealed Electricity RegulatoryCommissions Act, 1998 (“ERC Act”), and the ERC Act provided the State governments with an option to setup a SERC in their respective states. However, the Electricity Act made it mandatory for every state toconstitute a SERC in its State. The CERC’s functions include regulation of tariff of power generating companiesowned or controlled by the Central Government and tariff of power generating companies other than thoseowned or controlled by the Central Government, if such generating companies have a composite scheme forgeneration and sale of electricity in more than one State and of inter-State transmission of electricity;determination of tariff for inter-State transmission of electricity; issuance of licenses to entities for transmissionand trading with respect to their inter-State operations; adjudication of disputes involving generating companiesor transmission licensees regarding matters under the Electricity Act; power to refer any dispute for arbitration;levy of fees for purposes of the Electricity Act; specifying the Indian Electricity Grid Code (“IEGC”) withregard to the Grid Standards; specifying and enforcing standards with respect to quality, continuity andreliability of service by licensees; and fixation of the trading margin in inter-State trading of electricity, if87

considered necessary. CERC also performs certain advisory functions like advising the Central Government onformulation of the National Electricity Policy and Tariff Policy. The SERCs functions as specified under theElectricity Act, specifying or enforcing standards with respect to quality, continuity and reliability of service bylicensees and to fix the trading margin in intra-State trading of electricity, if considered necessary. TheElectricity Act also provides for establishment of a Joint Commission by agreement between two or more Stategovernments or by the Central Government in respect of a Union Territory and one or more State governments.The appropriate commissions are, in connection with any inquiry or proceedings under the Electricity Act,vested with powers of a civil court and all proceedings before the appropriate commission are deemed to bejudicial proceedings within the meaning of the Indian Penal Code.Central Government and each State government are required to each constitute a Coordination Forum consistingof the chairperson and members of the CERC or SERC, as the case may be, the Chairperson of the CEA in caseof the Forum being constituted by the Central Government, representatives of generating companies andtransmission licensees engaged in transmission of electricity (inter-State in case of CERC and within the State incase of a SERC). The Central Government is required to also constitute a forum of regulators consisting of thechairpersons of the CERC and SERCs. The chairperson of the CERC is the chairperson of the forum ofregulators. The CERC and SERCs may establish a Central or State Advisory Committee, respectively,appointing the chairperson of the CERC, or SERC, as the case may be, being the chairperson of such AdvisoryCommittee. The objects of such Advisory Committee will be to advise the appropriate commission on policy,matters relating to quality, continuity and extent of service provided by the licensees; compliance by licenseeswith the conditions of their licence; protection of consumer interest; electricity supply and standards ofperformance by utilities.The Electricity Act also provides for establishment of an Appellate Tribunal for Electricity vested with thepowers of a civil court to settle appeals against the order of an adjudicating officer or appropriate commissionunder the Electricity Act. Any person aggrieved by a decision of the Appellate Tribunal for Electricity may filean appeal to the Supreme Court. All proceedings before the Appellate Tribunal for Electricity are deemedjudicial proceedings within the meaning of the Indian Penal Code. The Appellate Tribunal commencedfunctioning and hearing appeals from July 21, 2005.Generation of ElectricityUnder the Electricity Act, a generating company is permitted to establish, operate and maintain a generatingstation provided it complies with the technical standards stipulated under the Electricity Act relating toconnectivity with the grid. There is no licensing requirement for the same. However, a generating companyintending to establish a hydro generating station is required to submit a scheme along with capital expenditureestimates to the CEA for concurrence, when such scheme exceeds Rs. 25 billion, provided the scheme conformsto the capacity and type mentioned in the National Electricity Plan and the site has been allocated through atransparent process of bidding in accordance with the guidelines issued by the Central Government. Any schemenot covered by the above conditions is required to be submitted to the CEA if the capital expenditure estimatesof the generating company exceed Rs. 5 billion. A DPR is required to be submitted in accordance with theGuidelines for Formulation of Detailed Project Reports for Hydro Electric Schemes, their Acceptance andExamination for Concurrence, 2007, notified by the CEA. The CEA, before concurring in any scheme submittedto it by such generating company, shall consider whether such scheme would prejudice prospects fordevelopment of the river or its tributaries for purposes including power generation, requirements of drinkingwater, irrigation, navigation, flood-control, or other public purposes, and also whether such scheme meets thenorms on dam design and safety.A generating company is permitted to supply electricity to any licensee (except transmission licensee) ordirectly to consumers who have availed open access, subject to regulations made under the Electricity Act. Agenerating company is required to establish, operate and maintain generating stations and may also set up tielines,sub-stations and dedicated transmission lines in accordance with the provisions of the Electricity Act andthe rules or regulations made thereunder. In this regard, a generating company has to comply with the technicalstandards for operation and maintenance of transmission lines stipulated in the Grid Standards issued by theCEA under the Electricity Act; submit technical details regarding its generating stations to the appropriatecommission and the CEA; and coordinate with the relevant Central or State transmission utility for transmissionof electricity generated by it.88

The appropriate electricity regulatory commission may issue such directions as it considers appropriate to agenerating company if such generating company enters into any agreement, abuses its dominant position orenters into a combination which is likely to cause or causes an adverse effect on competition in electricityindustry. Further, the Central and State governments are empowered under the Electricity Act to direct theoperation and maintenance of power generating stations in the event of a security threat to the State, a naturalcalamity or any other extraordinary circumstances. The Central Government has the power to make rules inorder to carry out the provisions of the Electricity Act and has the authority to prepare the National ElectricityPolicy and the Tariff Policy and modify the same from time to time. In exercise of such powers, the CentralGovernment has issued the National Electricity Policy on February 12, 2005 and the Tariff Policy on January 6,2006.The Electricty Act provides for a clear demarcation between the powers and functions of the statutory bodiescreated by it and also of the authorities it encompasses. The Central and State governments may make rules forcarrying out the provisions of the Electricity Act. The CEA may make regulations consistent with the ElectricityAct and the rules generally to carry out the provisions of the Electricity Act, including in respect of the GridStandards; measures relating to safety and electric supply; installation and operation of meters; procedure fortransaction of business; technical standards for construction of electrical plants and electric lines andconnectivity to the grid; form and manner in which and the time at which the State government and licenseesshall furnish statistics, returns or other information. The CERC and SERCs are also empowered to may makeregulations under the Electricity Act to carry out the provisions of the Electricity Act, including in respect of theIEGC; levy and collection of fees and charge from generating companies or transmission utilities or licensees;rates, charges and conditions in respect of intervening transmission facilities; reduction and elimination ofsurcharge and cross subsidies under the Electricity Act; conditions for determination of tariff; details to befurnished by licensee or generating company; procedures for calculating expected revenue from tariff andcharges.Failure to comply with an order or direction under the Electricity Act, within the time specified in the said orderor direction, or contravention or attempts or abets contravention of any provision of the Electricity Act or rulesor regulations made thereunder, will be punishable with imprisonment which may extend to three months orwith fine which may extend to Rs. 1 million or with both in respect of each offence and in the case of acontinuing failure, with additional fine which may extend to Rs. 5,000 for every day during which the failurecontinues after conviction for the first such offence. In case a complaint is filed before the appropriatecommission by any person or if such commission is satisfied that any person has contravened any provision ofthe Electricity Act or rules or regulations made thereunder or any direction issued by such commission, theappropriate commission may after giving such person an opportunity of being heard, direct that, withoutprejudice to any other penalty to which he may be liable under the Electricity Act, such person shall pay apenalty which shall not exceed Rs. 1million for each contravention and in case of a continuing failure, anadditional penalty which may extend to Rs. 6,000 for every day the failure continues after the first suchcontravention. Any penalty payable under the Electricity Act, if not paid, may be recovered as if it were anarrear of land revenue.Under the Electricity Act, if a State government requires grant of a subsidy to any consumer or class ofconsumers in the tariff determined by the SERC under the Electricity Act, such State government shall pay inadvance, in the manner specified by the SERC, the amount to compensate the person affected by the grant ofsuch subsidy or any other person concerned, to enable the such person to implement the subsidy provided by theState government.Development of hydropower projects and power sharing formulaThe MoP, by a notification dated June 8, 2001, has prescribed a three-stage procedure regarding thedevelopment of hydropower projects by public sector undertakings. The notification prescribes the key activitiesthat are required to be performed at each stage and the time period for the completion of such key activities.Details of the activities to be undertaken during the three stages are set forth below:(a)Stage-I: Any hydropower generation company proposing to set up a hydropower station is required toapproach the MoP for sanction of the proposed project. The MoP shall sanction expenditure of up toRs. 100 million on survey, investigation and preparation of the pre-feasibility report, subject to the89

same appearing in the five year plan. If the expenditure for the proposed project exceeds Rs. 100million, it requires sanction by the PIB;(b)(c)Stage-II: involves preparation of the DPR, pre-construction works, development of infrastructure andland acquisition. In the event estimated cumulative expenditure for Stages I and II exceeds Rs. 100million, the same shall be considered by the PIB. Proposals of over Rs. 200 million will be consideredby the Ministry of Finance and those involving over Rs. 500 million require the approval of the CCEA;Stage-III: the approval of PIB/CCEA would be required in respect of the construction of the project.These approvals would be sought after the environment and forests clearances have been obtained fromMoEF and TEC from the CEA.In addition, the MoP by its notification dated November 1, 1990 has prescribed the formula for sharing of powerand benefits from all central sector hydroelectric projects commissioned after September 7, 1990. The salientfeatures of the notification are set forth below:(a)(b)(c)15% of the generation capacity will be kept as ‘unallocated’ with the GoI for distribution within theregion or outside, depending on overall requirements;12% of the energy generated will be supplied free of cost to the concerned State where distress iscaused by the setting up of the project; andThe remaining 73% is distributed between the States in the region on the basis of Central planassistance given to various States in the region during the last five years and on the basis ofconsumption of electricity in the States in the region in the last five years, the two factors being givenequal weightage.The National Electricity Policy, 2005 (“NEP”)The NEP was prepared under the Electricity Act by the Government and came into effect on February 12, 2005,in consultation with the CEA and the respective State governments, in order to accelerate development in thepower sector by introducing provisions to provide supply of electricity to all areas and to protect interests ofconsumers and other stakeholders, keeping in view availability of energy resources, technology available toexploit such resources, economics of generation using different resources and energy security issues. The salientfeatures of this policy are as stated below:• providing access to electricity to all households in India within the next five years, including throughcreation of a ‘Rural Electrification Distribution Backbone’;• fully meeting India’s power demand by 2012, by overcoming energy and peaking shortages and makingavailable adequate spinning reserve;• per capita availability of electricity to be increased to over 1,000 units by 2012;• minimum lifeline consumption of one unit/household/day as a merit good by year 2012;• progressive reduction in surcharge in line with progressive reduction in cross-subsidies and reduction intariffs charged by SERCs;• supply of reliable and quality power of specified standards in an efficient manner and at reasonable rates;• financial turnaround and commercial viability of the electricity sector; and• protection of consumer’s interest.National Electricity Policy seeks full development of hydro potential. Choice of fuel for thermal generation is tobe based on economics of generation and supply of electricity. Exploitation of non-conventional energy sourcessuch as small hydro, solar, biomass and wind for additional power generation capacity is also envisaged.Development of National Grid is an important feature of the National Electricity Policy. National ElectricityPolicy recognizes the need for ensuring recovery of cost of service from consumers to make the power sectorsustainable. The existing cross-subsidies for other categories of consumers need to be reduced progressively andgradually. National Electricity Policy recognizes that a minimum level of support is required to make the90

electricity affordable for consumers of very poor category. Consumers below poverty line who consume below aspecified level, say 30 units per month may receive special support in terms of tariff which are cross-subsidized.Efforts would be made to ensure that the subsidies reach the targeted beneficiaries in the most transparent andefficient way.The National Electricity Policy lays special emphasis on time bound reduction of transmission and distributionlosses and advocates promotion of competition aimed at consumer benefits. National Electricity Policyestimates that to meet the objective of rapid economic growth and power for all including householdelectrification, an investment of the order of INR 9 trillion would be required to finance generation,transmission, sub-transmission, distribution and rural electrification projects upto the year 2012. Public sectorinvestments, both at the Central Government and state governments, will have to be stepped up and a sizeablepart of the investments will need to be brought in from the private sector. Public service obligations likeincreasing access to electricity to rural households and small and marginal farmers have highest priority overpublic finances. Private sector has various options for investments. To attract adequate private investments inpower sector, return on investment will need to be provided at par with, if not preference to, investmentopportunities in other sectors. Appropriate balance will be maintained between the interest of the consumers andthe needs for investment.Open access in transmission will promote competition and in turn lead to availability of cheaper power. NationalElectricity Policy emphasizes that the CERC and SERCs need to provide facilitative framework for nondiscriminatoryopen access at the earliest including technological upgradation of the State Load DispatchCentres by June 2006 to ensure data acquisition capability on a real time basis.Open access to distribution networks, initially for bulk consumers, would increase the availability of cheaperand reliable power supply. SERCs have been mandated to notify regulations by June 2005 for laying down theroad map for introducing open access in distribution. It has also been envisaged that the amount of cross-subsidysurcharge and additional surcharge to be levied from consumers who are permitted open access should notbecome so onerous that it eliminates competition.National Electricity Policy stipulates that SERCs should regulate utilities based on pre-determined indices onquality of power supply. Parameters should include frequency and duration of interruption, voltage parameters,harmonics, transformer failure rates, waiting time for restoration of supply, percentage defective meters andwaiting list of new connections. SERCs would specify expected standards of performance. National ElectricityPolicy emphasizes that the Central Government, state governments and Appropriate ERCs will facilitatecapacity building of consumer groups and their effective representation before the Appropriate ERCs. This willenhance the efficacy of regulatory process.The Tariff Policy, 2006The Tariff Policy was prepared under the Electricity Act, and brought into effect by the Government on January6, 2006, in consultation with the CEA and the respective State governments, to ensure financial viability of thepower sector and availability of electricity to consumers at reasonable rates, attract investments and promotetransparency and consistency in regulatory approach for tariff setting. The CERC and SERCs are guided by theTariff Policy. The Tariff Policy prescribes that for all future requirement of power, the distribution licensee isrequired to procure such power through a process of competitive bidding. The Government issued the guidelinesfor procurement of electricity through competitive bidding in January 2005. Further, PPAs are required toensure adequate and bankable payment security mechanism in case of default.In addition, the appropriate electricity regulatory commissions have the power to determine AFC for hydrogenerating stations. The components of annual fixed charges are interest on loan capital, depreciation andadvances against depreciation, return on equity, operation and maintenance expenses; and interest on workingcapital. The AFC are recovered in the form of capacity and primary energy charges. The return on equityallowed is 15.5% p.a. on the equity amount as per the current tariff regulations. Tax on income, extra rupeeliabilities are to be reimbursed separately to the power stations as per actuals.Under the Electricity Act, the appropriate commission may differentiate according to the consumer's load factor,power factor, voltage, total consumption of electricity during any specified period or the time at which thesupply is required or the geographical position of any area, nature of supply and the purpose for which thesupply is required. Further, no tariff or part of any tariff may ordinarily be amended more frequently than oncein any financial year, except in respect of any changes expressly permitted in terms of any fuel surcharge91

formula specified. An application for determination of tariff under the Electricity Act shall be made by agenerating company or licensee in such manner and accompanied by such fee as determined by regulationsissued under the Electricity Act and Tariff Policy. The appropriate commission shall, after consideringsuggestions and objections received from the public, issue a tariff order accepting the application withmodifications or conditions specified in that order or may reject the application if such application is not inaccordance with applicable law, provided that an applicant shall be given a reasonable opportunity of beingheard before rejecting his application.National Electricity PlanA National Electricity Plan is required to be notified by the CEA once every five years under the Electricity Actin accordance with the NEP and with the approval of the Central Government.The Hydro Power Policy, 2008The Hydro Power Policy was notified by the GoI, setting out the following objectives: (a) inducing privateinvestment in hydropower development; (b) harnessing the balance hydroelectric potential; (c) improvingresettlement and rehabilitation; and (d) facilitating financial viability. The salient features of this policy are setforth below:(a)(b)(c)(d)(e)(f)(g)(h)The existing dispensation available to the public sector regarding exemption from tariff based biddingup to January 2011 is extended to private sector hydroelectric projects;State governments would be required to follow a transparent procedure for awarding potential sites tothe private sector;The concerned private developer would be required to follow the existing procedure, including gettingthe DPR prepared, obtaining concurrence of the CEA/State government, obtaining environment, forestand other statutory clearance and then approach the appropriate regulator. It would be obligatory for thedevelopers to go through an international competitive bidding process for award of contract for supplyof equipment and construction of the project either through a turnkey contract or through a few welldefined packages;Tariff of the project would be decided by the appropriate commission;Special incentive for merchant sales of up to 40% of the saleable energy is envisaged for the project(s)meeting the time lines;An additional 1% free power from the project would be provided and earmarked for a Local AreaDevelopment Fund, aimed at providing a regular stream of revenue for income generation and welfareschemes, creation of additional infrastructure and common facilities on a sustained and continued basisover the life of the project. It is further recommended that the host State government would alsoprovide a matching 1% from their share of 12% free power towards this corpus fund. This fund couldbe operated by a standing committee headed by an officer of the State government not lower than adistrict magistrate;For 10 years from the date of commissioning of the project, 100 units of electricity per month would beprovided by the project developer to each project affected family through the relevant distributioncompany;In the interest of speedy implementation of hydroelectric projects, it is proposed that the Resettlementand Rehabilitation package should be more liberal than the National Resettlement and RehabilitationPolicy, 2007.Modes of participation in power projectsThe two modes of participating in power projects are either through the memorandum of understanding(“MoU”) route or the Bidding route.MoU Route92

The cost determination under the MoU route usually involves:• determination of receivables of capital cost. The capital costs are required to be approved by a CEA,Government of India;• approval of interest rates and local and foreign debt;• finalizing the term of loans and/or or other debt;• finalizing the extent of foreign exchange protection;• fixing operating parameters within the prescribed ceilings;• identifying Deemed Generation provisions;• evaluating the extent of despatchability;• evaluating the level of incentive payments;• identifying change in law in terms of tax or any other matter;• identifying the extent of working capital permissible;• evaluating the premium on fuel prices for assured supply;• identifying fuel supply and transportation risk and issues;• evaluating escalations in operation and maintenance and insurance expenses permissible;• evaluating the extent of maintenance of spares permissible; and• rebates in respect of prompt payment.The MoU route with a cost plus approach was initially adapted to attract investment. However, there wereseveral complexities in calculating the above costs despite the capital cost of the project being frozen by theCEA. Under the Electricity Act, the CEA does not have the power to determine capital cost for the projectsanymore and the requisite filings for approval of capital cost and tariff are with the regulatory commissions.This cost plus tariff mechanism is not ideally suited for competitive bidding as this would require biddingon every element of cost of generation which becomes difficult to verify and monitor over the life of the PPA.Further, the nature of costs for IPPs is very different from public sector power project costs and in the absenceof complete knowledge of cost profile, it would be impossible to design a competitive bidding process based oncost plus approach that is fair to both sides thereby eliciting good investor response. In light of the same, thecompetitive bid route was envisaged.Bid RouteBidding essentially is based on bulk power tariff structure. As noted, under the Electricity Act, the regulatorycommission is required to adopt a bid-based tariff, although the Bidding Guidelines permit the bidding authorityto reject all price bids received if the rates quoted are not aligned to the prevailing market prices. The BiddingGuidelines recommend bid evaluation on the basis of levelised tariff. The Bidding Guidelines envisages twotypes of bids: Case I bids, where the location, technology and fuel is not specified by the procurers, i.e. thegenerating company has the freedom to choose the site and the technology for the power plant; and Case IIbids, where the projects are location specific and fuel specific.Tariff rates for procurement of electricity by distribution licensees (Procurer), to be decided, can be for:• long-term procurement of electricity for a period of 7 years and above;• medium term procurement for a period of up to 7 years but exceeding 1 year.For long-term procurement under tariff bidding guidelines, a two-stage process featuring separate RFQ and RFPstages shall be adopted for the bid process. The procurer may, at his option, adopt a single stage tender processfor medium term procurement, combining the RFP and RFQ processes.Under the bid route, typically the IPPs can bid at two parameters:• The fixed or capacity charge; and93

• The variable or energy charge, which comprises the fuel cost for the electricity generated. Bidders areusually permitted to quote a base price and an acceptable escalation formula.The Bidding Guidelines envisages a two-step process – pre-qualification and final bid. Bidders are required tosubmit a technical and financial bid at the RFP stage.Increasingly, the trend is to have all purchase of power and distribution licenses through competitive bids. TheTariff Policy 2006 requires that all procurement of power after January 6, 2006 (except for PPAs approved orsubmitted for approval before January 6, 2006 or projects whose financing has been tied up prior to January 6,2006) by distribution licensees has to be through competitive bidding. Some state regulators have, however,continued to purchase power under the MoU route, stating that the Tariff Policy is merely indicative and notbinding.Roles of key organisations and playersThe roles and functions of certain key organisations and players that operate in the power sector have been setout below:Central and State GovernmentsThe Electricity Act reserves a significant involvement of the central government in the functioning of the powersector. It has been assigned a number of duties, including planning and policy formulation, rule making,appointing, establishing, designating authority, prescribing duties and other tasks, funding, and issuingdirections.The Central Government designates a CTU and establishes the NLDC, RLDC, the Appellate Tribunal, theCoordination Forum, and the Regulators’ Forum. It has the power to vest the property of a CTU in a company orcompanies and decide on the jurisdiction of benches of the Appellate Tribunal. It also prescribes the duties andfunctions of the CEA, NLDC and RLDC.The Central Government is also responsible for the following: a) specifying additional requirements for grantingmore than one distribution licensee; b) providing no-objection certificates for granting license if the service areaincludes central government installations such as cantonment, aerodrome, defence area, etc; c) demarcating thecountry into transmission regions for the purpose of inter-state transmission; d) issuing guidelines fortransparent bidding process; e) approving the salary and benefits of the employees of the CEA, CERC andAppellate Tribunal; f) referring cases to the Appellate Tribunal for removal of members of the CERC on theground of misbehaviour; and g) prescribing the procedures for inquiry into misbehaviour by members.The state government exercises appointing, designating powers, provides funds and makes rules notifications,etc. It has the powers to appoint or remove members of the SERC including the chairman, to approve the termsand conditions of appointment of the secretary to the SERC and other staff. It is also responsible for constitutingthe selection committee for appointing members of SERC. It establishes the state load dispatch centre (SL DC),notifies the STU, vests property of STU in companies, draws up reorganisation of the SEB through acquiring itsassets and re-vests it through a transfer scheme. It is empowered to constitute special courts, and statecoordination forum. The state government creates the SERC fund and can provide loan or grants for running theSERC. It also decides how the SERC should utilize the fund and how it should maintain accounts. The stategovernment can also provide subsidy to consumers, but the Electricity Act requires it to compensate the licenseein advance by the amount of loss expected to be suffered by the licensee in implementing the subsidy. The stategovernment notifies rural areas where exemption of license conditions would apply and issues directions to theSERC on public interest issues.The Land Acquisition Act, 1894The Land Acquisition Act sets forth provisions as per which the government may compulsory acquire land forany "public purpose". 'Public purpose' has been defined to include town or rural planning, planned developmentof land from public funds pursuant to any government scheme or policy, development schemes sponsored by thegovernment, including acquisition for a corporation owned or controlled by the State. For a corporate bodywhich is not owned or controlled by the State, prior permission from the appropriate government is required,94

along with an executed agreement with the appropriate government. Any person having an interest in suchcompulsorily acquired land has the right to object and the right to fair and just compensation. The value ofcompensation for the property acquired depends on several factors, which, among other things, include themarket value of the land and damage sustained by the person in terms of loss of profits.The Environment (Protection) Act, 1986 (“EPA”)As per the revised Environment Impact Assessment notification dated September 14, 2006 (“EIANotification”) site clearances for Stage - I and II have been dispensed with. Now, as per the new procedurespecified in the revised EIA notification, for Category “A” hydroelectric project (for or more than 50 MW),clearance for pre-construction activities is given by the MoEF during the scoping stage along with the terms ofreference (“ToR”) for undertaking the EIA studies. The documents required for this purpose include anapplication seeking prior environmental clearance, to be submitted in the Form prescribed by the MoEF, alongwith a copy of Pre-feasibility Report (“PFR”). For preparation of the PFR no clearance from MoEF is nowrequired. Earlier, site clearance Stage - I was required for undertaking the survey and investigation for thepreparation of PFR/Feasibility Report. However, preparation of DPR can be undertaken only after clearance forpre-construction activities is granted by the MoEF.Once the clearance for pre-construction activities is accorded by the MoEF, along with the approval on ToR forthe EIA studies, comprehensive EIA studies are conducted through reputed institutes and universities. Once theEIA studies are completed, the process of public consultation and public hearing is initiated. As per the revisedEIA Notification, public hearing is conducted at the project site(s) or in its close proximity district-wise, inaccordance with the procedure laid down therein. During the public consultation process, the responses fromconcerned persons are invited by MoEF as well as the concerned State Pollution Control Board, in writing, byplacing on their website the summary of the EIA report.After completion of the public consultation, the environmental concerns expressed during the process areaddressed in the draft EIA and EMP reports and the final EIA and EMP reports are submitted along with a copyof DPR to MoEF for appraisal by the EAC. Alternatively, a supplementary report to EIA and EMP, addressingthe concerns is submitted. Once the project is recommended by the EAC, the environmental clearance is issuedby the MoEF subject to compliance with the conditions stipulated in the clearance letter.The Forest (Conservation) Act, 1980 (“FCA”)The FCA came into force on October 25, 1980, prohibits use of any forest for non-forest purposes, except withthe prior consent of the GoI. ‘Non-forest purposes’ do not include uses (including construction of dams)ancillary to the conservation, development or management of forests or wildlife. Contravention of this provisionmay attract a penalty of imprisonment of up to fifteen days. A Forest Advisory Committee has been constitutedunder the FCA to advise the GoI on the grant of approvals and other matters relating to forest conservation. TheGoI reserves the rights to make rules under the FCA.The Forest (Conservation) Rules, notified on January 10, 2003 which superseded the Forest (Conservation)Rules, 1981, prescribe the forms in which approvals or renewals of approvals under the FCA are required to besought.The National Water Policy, 2002The National Water Policy, notified in 1987 was significantly amended and notified in 2002 by the Ministry ofWater Resources, GoI. The National Water Policy notes that water allocation priorities should be broadly asfollows: drinking water; irrigation; hydropower; ecology; agro-industries and non-agricultural industries; andnavigation and other uses. However, the priorities could be modified or added to, if warranted by region specificconsiderations. The National Water Policy states that water resource development projects should, as far aspossible, be planned and developed as multipurpose projects, with an integrated and multi-disciplinary approachto the planning, formulation, clearance and implementation of projects, including catchment area treatment andmanagement, environmental and ecological aspects, the rehabilitation of affected people and command areadevelopment. Planning of projects and economic evaluation of projects in hilly areas should take into account,inter alia, possibilities of hydropower development.Private sector participation should be encouraged in planning, development and management of water resourcesprojects for diverse uses, wherever feasible. Private sector participation may help in introducing innovativeideas, generating financial resources, introducing corporate management and improving service efficiency and95

accountability to users. Various combinations of private sector participation, in building, owning, operating,leasing and transferring of water resources facilities, may be considered. Water sharing/distribution among theStates should be guided by a national perspective with due regard to water resources availability and needswithin the river basin. The National Water Policy recommends that the Inter-State Water Disputes Act, 1956, beamended for timely adjudication of water disputes referred to the Tribunal, respective States should formulatetheir own Water Policies backed by operational action plans in a time bound manner, and that States shouldevolve their own detailed resettlement and rehabilitation policies for the sector, taking into account the localconditions.The Water (Prevention and Control of Pollution) Act, 1974 (the “Water Act”)The Water Act aims to prevent and control water pollution as well as restore water quality by establishing andempowering the Central Pollution Control Board and the State Pollution Control Boards. Under the Water Act,any person establishing any industry, operation or process, any treatment or disposal system, use of any new oraltered outlet for the discharge of sewage or new discharge of sewage, must obtain the consent of the relevantState Pollution Control Board, which is empowered to establish standards and conditions that are required to becomplied with. In certain cases the State Pollution Control Board may cause the local Magistrates to restrain theactivities of such person who is likely to cause pollution. Penalty for the contravention of the provisions of theWater Act include imposition of fines or imprisonment or both.The Central Pollution Control Board has powers, inter alia, to specify and modify standards for streams andwells, while the State Pollution Control Boards have powers, inter alia, to inspect any sewage or tradeeffluents, and to review plans, specifications or other data relating to plants set up for treatment of water, toevolve efficient methods of disposal of sewage and trade effluents on land, to advise the State Governmentwith respect to the suitability of any premises or location for carrying on any industry likely to pollute a streamor a well, to specify standards for treatment of sewage and trade effluents, to specify effluent standards to becomplied with by persons while causing discharge of sewage, to obtain information from any industry and totake emergency measures in case of pollution of any stream or well.A central water laboratory and a state water laboratory have been established under the Water Act.The Air (Prevention and Control of Pollution) Act, 1981 (the “Air Act”)Pursuant to the provisions of the Air Act, any person, establishing or operating any industrial plant within an airpollution control area, must obtain the consent of the relevant State Pollution Control Board prior toestablishing or operating such industrial plant. The State Pollution Control Board is required to grant consentwithin a period of four months of receipt of an application, but may impose conditions relating to pollutioncontrol equipment to be installed at the facilities. No person operating any industrial plant in any airpollution control area is permitted to discharge the emission of any air pollutant in excess of the standardslaid down by the State Pollution Control Board. The penalties for the failure to comply with the provisions ofthe Air Act include imprisonment of up to six years and the payment of a fine as may be deemed appropriate. Ifan area is declared by the State Government to be an air pollution control area, then, no industrial plant may beoperated in that area without the prior consent of the State Pollution Control Board.Under the Air Act, the Central Pollution Control Board has powers, inter alia, to specify standards for qualityof air, while the State Pollution Control Boards have powers, inter alia, to inspect any control equipment,industrial plant or manufacturing process, to advise the State Government with respect to the suitability of anypremises or location for carrying on any industry and to obtain information from any industry.The Hazardous Wastes (Management and Handling) Rules, 1989 (the “Hazardous Wastes Rules”)The Hazardous Wastes Rules aim to regulate the proper collection, reception, treatment, storage and disposal ofhazardous waste by imposing an obligation on every occupier and operator of a facility generating hazardouswaste to dispose such waste without adverse effect on the environment, including through the proper collection,treatment, storage and disposal of such waste. Every occupier and operator of a facility generating hazardouswaste must obtain an approval from the Pollution Control Board. The occupier, the transporter and the operatorare liable for damages caused to the environment resulting from the improper handling and disposal ofhazardous waste. The operator and the occupier of a facility are liable for any fine that may be levied by therespective State Pollution Control Boards. Penalty for the contravention of the provisions of the Hazardous96

Waste Rules includes imprisonment up to five years and imposition of fines as may be specified in the EPA orboth.The Company is required to obtain and maintain statutory clearances relating to Pollution Control andEnvironment in relation to its power projects.The National Resettlement and Rehabilitation Policy, 2007The National Rehabilitation and Resettlement Policy was notified by the GoI on October 31, 2007, torehabilitate and resettle persons affected by the acquisition of land for projects of public purpose or involuntarydisplacement due to any other reason. The policy covers all cases of involuntary displacements. In case of eachsuch project, which involves involuntary displacement of four hundred or more families en masse in plain areas,or two hundred or more families en masse in tribal or hilly areas, Desert Development Programme blocks orareas mentioned in the Fifth or Sixth Schedule to the Constitution of India, the appropriate Government shallconstitute a committee under the chairpersonship of the Administrator for rehabilitation and resettlement, to becalled the Rehabilitation and Resettlement Committee, to monitor progress of implementation of a scheme ofrehabilitation and resettlement of the affected families, and to carry out post-implementation social audits.Kyoto Protocol and Carbon CreditsThe Kyoto Protocol is a protocol to the International Framework Convention on Climate Change with theobjective of reducing greenhouse gases (GHG) that cause climate change. The Kyoto Protocol was agreed onDecember 11, 1997 at the third conference of the parties to the treaty when they met in Kyoto, and entered intoforce on February 16, 2005. India ratified the Kyoto Protocol on August 22, 2006.The Kyoto Protocol defines legally binding targets and timetables for reducing the GHG emissions ofindustrialized countries that ratified the Kyoto Protocol.Governments have been separated into developed nations (who have accepted GHG emission reductionobligations) and developing nations (who have no GHG emission reduction obligations). The protocol includesflexible mechanisms’ which allow developed nations to meet their GHG emission limitation by purchasingGHG emission reductions from elsewhere. These can be bought either from financial exchanges, from projectswhich reduce emissions in developing nations under the CDM, the Joint Implementation scheme or fromdeveloped nations with excess allowances.Typical emission certificates are:• Certified Emission Reduction (CER);• Emission Reduction Unit (ERU); and• Voluntary or Verified Emission Reductions (VER).CERs and ERUs are certificates generated from emission reduction projects, under the CDM for projectsimplemented in developing countries, and under Joint Implementation (“JI”) for projects implemented indeveloped countries, respectively. These mechanisms are introduced within the Kyoto Protocol. For projectswhich cannot be implemented as CDM or JI, but still fulfill the required standards, VERs can be generated.VERs, however, cannot be used for compliance under the Kyoto Protocol.Labor Laws and RegulationsDepending upon the nature of the activity undertaken by our Company, applicable labor laws and regulationsinclude the following:• The Contract Labour (Regulation and Abolition) Act, 1970;• The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952;97

• The Employees’ State Insurance Act, 1948;• The Factories Act, 1948;• The Industrial Disputes Act, 1947;• The Payment of Wages Act, 1936;• The Workmen’s Compensation Act, 1923;• The Minimum Wages Act, 1948;• The Payment of Bonus Act, 1965; and• The Payment of Gratuity Act, 1972;The Contract Labour (Regulation and Abolition) Act, 1970The Contract Labour (Regulation and Abolition) Act, 1970 (“CLRA”) require registration of everyestablishment, including establishments of the GoI and local authorities, in which 20 or more workmen are orwere employed on any day in the preceding 12 months as contract labour, and of every contractor who employsor employed 20 or more workmen on any day of the preceding 12 months. The CLRA does not apply toestablishments where work performed is of intermittent or casual nature. The GoI and State governments arerequired to set up Central and State Advisory Boards, which perform advisory functions in relation to mattersarising out of the administration of the CLRA.Under the CLRA, a registered contractor is required to pay wages and ensure disbursement of wages in thepresence of an authorised representative of the principal employer. In case of a contractor’s failure to pay wagesin part or in full, the principal employer is liable to pay the same. In case the contract labour performs same orsimilar work as regular workmen, they are entitled to the same wages and service conditions as regularworkmen as per the Contract Labour (Regulation and Abolition) Central Rules, 1971.The Trade Unions Act, 1926Trade Unions Act provides for the registration of the trade unions with the Registrars of Trade Unions of theirterritory. Any seven or more members of a trade union, by submitting their names to the Registrar of TradeUnions and otherwise complying with the provisions of the Trade Unions Act with respect to registration mayapply for the registration of the Trade Union under the Trade Unions Act. The Act gives protection to registeredtrade unions in certain cases against civil and criminal action.The Factories Act, 1948, as amended (the “Factories Act”)The Factories Act defines a “factory” to be any premise which employs or employed on any day in the previoustwelve months, ten or more workers and in which a manufacturing process is being carried on with the aid ofpower or any premises where there are or were in the previous twelve months, at least twenty workers workingeven though there is no manufacturing process being carried on with the aid of power. State Governmentsprescribe rules with respect to the prior submission of plans, their approval for the establishment of factories andthe registration and licensing of factories.The Factories Act provides that the “occupier” of a factory (defined as the person who has ultimate controlover the affairs of the factory and in the case of a company, any one of the directors) shall ensure the health,safety and welfare of all workers while they are at work in the factory, especially in respect of safety andproper maintenance of the factory such that it does not pose health risks, the safe use, handling, storage andtransport of factory articles and substances, provision of adequate instruction, training and supervision toensure workers’ health and safety, cleanliness and safe working conditions.If there is a contravention of any of the provisions of the Factories Act or the rules framed thereunder, theoccupier and manager of the factory may be punished with imprisonment for a term up to two years or with afine up to Rs. 100,000 or with both, and in case of contravention continuing after conviction, with a fine of up toRs. 1,000 per day of contravention. In case of a contravention which results in an accident causing death orserious bodily injury, the fine shall not be less than Rs. 25,000 in the case of an accident causing death, and Rs.5,000 in the case of an accident causing serious bodily injury.98

HISTORY AND CERTAIN OTHER CORPORATE MATTERSBrief Corporate History of our CompanyOur Company was incorporated on May 24, 1988 under the Companies Act with the RoC under the name“Nathpa Jhakri Power Corporation Private Limited”. The word “Private” was deleted under Section 620 readwith Section 21 and 23 of the Companies Act with effect from November 3, 1988. Subsequently, pursuant to theshareholders resolution dated September 17, 2002, the name of the Company was changed from “Nathpa JhakriPower Corporation Limited” to “Satluj Jal Vidyut Nigam Limited” as the operations of our Company werebased in and around the river Sutlej. Consequent thereto a fresh certificate of incorporation dated November 11,2002 was issued by the RoC. Further, pursuant to the shareholders resolution dated September 10, 2009, thename of the Company was again changed from “Satluj Jal Vidyut Nigam Limited” to “SJVN Limited” as theoperations of our Company expanded and were no longer confined to the area in and around the river Sutlej. Bythe same resolution dated September 10, 2009, the Company was converted into a public limited company.Accordingly a fresh certificate of incorporation dated September 22, 2009 was issued by the RoC.For details relating to our Company‘s business activities, operations and growth, location of plants, capacitybuilt-up, technology, competition, major suppliers and customers, environmental issues, see section titled “OurBusiness” on page 58. For details relating to the management of our Company, see section titled “OurManagement” on page 104.Changes in our Registered OfficeThe Registered Office of our Company was initially located at Kumar House, Shimla, Himachal Pradesh. It wassubsequently moved for administrative reasons to its present location i.e. Himfed Building, New Shimla-171009, Himachal Pradesh with effect from February 3, 1994.Major eventsYearEvent1988 Incorporation of the Company1992 Company took over the execution of NJHEP from HPSEB1997 Enhancement of authorised share capital of Company from Rs.10,000 million to Rs. 22,000 million.1999 Enhancement of authorised share capital of Company from Rs.22,000 million to Rs. 45,000 million.2002 Change of name of Company from Nathpa Jhakri Power Corporation Limited to Satluj Jal Vidyut Nigam Limited2003 Commercial generation of units for NJHEP2004 GoHP allocated Luhri Hydro Electric Project to the Company for preparation of detailed project reportImplementation agreement signed with GoHP for RHEP.2005 DPR cleared by CEA for RHEPAgreement signed with Government of Uttarakhand for execution of Devsari HEP (300 MW), Naitwar Mori HEP (33 MW) andJakhol Sankri HEP (33 MW) on BOO basis.2006 Public Investment Board clearance for RHEP.2007 CCEA clearance for RHEP2008 Grant of Mini Ratna Category I status to the Company;Upgradation of the Company from Schedule B to Schedule A Central Public Sector Enterprise;MoU signed for Arun - III HEP with Government of Nepal;MoU signed between GoHP and the Company for the implementation of Luhri HEP; andMoU signed for the execution of Dhaulasidh HEP with GoHP.2009 Change of name of Company from “Satluj Jal Vidyut Nigam Limited” to “SJVN Limited”;Change of status of Company from private limited company to public limited Company;Enhancement of authorised share capital of Company from Rs.45,000 million to Rs. 70,000 million;Sub division of face value of equity shares from Rs.1,000 per equity share to Rs. 10 per equity share.2010 For the first time in the operating history of the NJHPS, 7017.55 million units were generated in the Fiscal 201099

Our Company has 9 shareholders as on the date of filing this Red Herring Prospectus.Awards and recognitionsWe were awarded the Rajiv Gandhi National Quality Award, 2008 in the ‘Best of All’ category on December17, 2009 by the Bureau of Indian Standards.We have received the following awards and recognitions from the Greentech Foundation for achieving andmaintaining high standards in various aspects of our business.The Greentech Foundation was established in the year 1999 and is based in California and New Delhi. Thefoundation is a non-profit organisation committed to recognising outstanding performance in relation to safetyissues. The foundation has also taken a lead role in promoting education, training, research and dissemination ofknowledge, advancing the scientific, technical and practical aspects of safety in the workplace, environmentprotection and climate change. To this effect, the Greentech Foundation has instituted the annual GreentechFoundation Safety Awards and Greentech Environment Excellance Awards to recognise, reward and promoteexceptional goals in the field of safety and all positive aspects of environmental responsibilities.S.No.Award Awarded By In recognition of Date1 Safety Award (Silver Award in powersector)GreentechFoundationOutstanding achievement in safety managementfor NJHEP2009, 2008,2007 and20062 Greentech Environment ExcellenceAward (Silver Award)GreentechFoundationOutstanding achievement in environmentmanagement for RHEP20093 Greentech Environment ExcellenceAward (Bronze Award)GreentechFoundationOutstanding achievement in environmentmanagement for RHEP2007 and2006CertificationsWe have received the following certifications including renewals in various aspects of our business:YearCertification2009 Bureau of Indian Standards granted to the Company a license (no. 9000132) for occupational health and safety managementsystems certification to carry out activities at RHEP (for construction of tunnel from Jhakri to Bayal and construction of powerhouse at Bayal for generation of 412 MW of hydro electricity including office and allied works) in accordance with the IS18001:2007. The license is valid from March 31, 2009 until March 30, 2012.2009 Bureau of Indian Standards granted to the Company a license (no. 9000302) for occupational health and safety managementsystems certification to carry out activities at RHEP (for construction of tunnel from Jhakri to Bayal and construction of powerhouse at Bayal for generation of 412 MW of hydro electricity including office and allied works) in accordance with the IS14001:2004. The license is valid from March 31, 2009 until March 30, 2012.2008 Certificate granted by the certification body of the TUV SUD Management Service GmbH Trading as TUV SUD South AsiaPrivate Limited to the Company certifying that the construction of the tunnel and power house from Jhakri to Bayal for generationof 412 MW of electricity complied with the requirements of ISO 9001:2000.2008 Det Norkse Veritas Management System Certificate granted to the Company certifying that the quality management system of theCompany with regard to the services of design, contracting, quality assurance and related support to hydro power projects / hydropower stations conforms to the Quality Management System Standard ISO 9001: 2000. The certificate is valid until February 11,2011.Our Main ObjectsOur main objects, as contained in our Memorandum of Association are:i.(a)To plan, promote, develop all forms of power, both renewable as well as non-renewable except thermaland all ancillary activities related thereto, in India and abroad including planning, investigation,research, design and preparation of preliminary, feasibility and definite Project reports, construction,100

generation, comprehensive operation, maintenance, Renovation & Modernisation of power stations andprojects, transmission, distribution, sale of power generated at Stations in India and abroad.(b)ii.iii.iv.To undertake, where necessary, construction of transmission lines and ancillary works for properevacuation and distribution of power.To coordinate the activities of its subsidiaries to determine their economic and financialobjectives/targets and to review, control, guide and direct their performance with a view to secureoptimum utilisation of all resources placed at their disposal.To act as an agent of Government/Public Sector financial Institutions, to exercise all the rights andpowers exercisable at any meeting of any Company engaged in the planning, investigations, research,design and preparation of preliminary, feasibility and definite project reports, construction, generation,operation, maintenance, Renovation & Modernisation of power stations and projects, transmission,distribution and sale of power in respect of any shares held by the Governments, Public financialInstitutions, nationalised banks, nationalised insurance companies with a view to secure the mosteffective utilisation of the financial investments and loans in such companies and the most efficientdevelopment of the concerned industries.To carry on the business of purchasing, selling, importing, exporting, producing, trading,manufacturing or otherwise dealing in all aspects of planning, investigation, research, design andpreparation of preliminary, feasibility and definite Project reports, development, construction,generation, operation and maintenance, renovation & modernisation, transmission, distribution and saleof power, both from renewable as well as non-renewable sources, ancillary and other allied industriesand for that purpose to install, operate and manage all necessary plants, establishments and works.For details relating to our business and operations, please refer to sections on “Our Business” and “FinancialStatements” on pages 58 and F- 1 respectivelyChanges in our Memorandum of AssociationSince our incorporation, the following changes have been made to our Memorandum of Association:Sl.No.Date ofshareholders’meetingNature of Amendment1 06.06.1997 Increase of authorised capital of our Company from Rs. 10,000 million comprising of 10,000,000 EquityShares of Rs. 1000 each to Rs. 22,000 million comprising of 22,000,000 Equity Shares of Rs. 1000 each.2 20.09.1999 Increase of authorised capital of our Company from Rs. 22,000 million comprising of 22,000,000 EquityShares of Rs. 1000 each to Rs. 45,000 million comprising of 45,000,000 Equity Shares of Rs. 1000 each.3 17.09.2002 Change of name of our Company from “Nathpa Jhakri Power Corporation Limited to “Satluj Jal Vidyut NigamLimited”.4 10.09.2009 Change of name of the Company from “Satluj Jal Vidyut Nigam Limited” to “SJVN Limited”.Increase of authorised capital from Rs. 45,000 million to Rs. 70,000 million and a simultaneous split of EquityShares from Rs.1000 each to Rs. 10 each thereby altering the authorised share capital to 7,000,000,000 EquityShares of Rs. 10 each.The following clauses were inserted as clause (iii) and Clause (iv) in the main object clause of Memorandum:iii.iv.To act as an agent of Government/Public Sector financial Institutions, to exercise all the rights andpowers exercisable at any meeting of any Company engaged in the planning, investigations, research,design and preparation of preliminary, feasibility and definite project reports, construction, generation,operation, maintenance, Renovation & Modernisation of power stations and projects, transmission,distribution and sale of power in respect of any shares held by the Governments, Public financialInstitutions, nationalised banks, nationalised insurance companies with a view to secure the mosteffective utilisation of the financial investments and loans in such companies and the most efficientdevelopment of the concerned industries.To carry on the business of purchasing, selling, importing, exporting, producing, trading, manufacturingor otherwise dealing in all aspects of planning, investigation, research, design and preparation ofpreliminary, feasibility and definite Project reports, development, construction, generation, operationand maintenance, renovation & modernisation, transmission, distribution and sale of power, both from101

enewable as well as non-renewable sources, ancillary and other allied industries and for that purposeto install, operate and manage all necessary plants, establishments and works.Our Company is not operating under any injunction or restraining order.Defaults or Rescheduling of Borrowings with Financial Institutions/ BanksFor details in relation to rescheduling of borrowings with financial institutions/ banks, see section titled“Financial Indebtedness” on page 123.Strikes or Labour UnrestExcept some minor losses, we have till date, not lost any time on account of strikes or labour unrest.Changes in the activities of our Company during the last five yearsThere have been no changes in the activities of the Company during the last five years preceding the date of thisRed Herring Prospectus, which may have had a material effect on our profits or loss.Capital raising through equity and debtFor details in relation to our capital raising activities through equity and debt, see the section titled “Financial Indebtedness” and “Capital Structure” on page 123 and 23 respectively.Time and Cost OverrunThere have been time and cost overruns with respect to setting up and commissioning of NJHEP project and thecost estimates for the same have been revised thrice with the latest revised cost estimates approved by the MoPby its letter dated August 14, 2007. The third revised cost estimate as sanctioned by the MoP is Rs. 81,877.13million.There have been time overruns with regard to the Rampur HEP. The same has been documented in anImplementation Review Support Mission Report issued by the World Bank dated October 23, 2009. With regardto time overruns, the report states that tunnelling in the head race tunnel upstream of the Goshai Adit had beenreduced to 30 meters per month, which led to delays in the completion of the Adit. This is presently beingaddressed with the implementation of a Tunnel Acceleration Plan as advised by the World Bank. The nextreview for the cost and time estimates for the Rampur HEP was scheduled to take place in March 2010. As atthe date of this Red Herring Prospectus, this review has not been conducted.Strategic PartnersAs on the date of this RHP, our Company does not have any strategic partners within the meaning of the SEBIICDR Regulations.Financial PartnersAs on the date of this RHP, apart from our various arrangements with our lenders and bankers, which weundertake in the ordinary course of our business, our Company does not have any other financial partners withinthe meaning of the SEBI ICDR Regulations.Shareholder AgreementsAs on the date of this RHP, our Company has not entered into any shareholder agreements.Other Agreements102

Except as disclosed in this Red Herring Prospectus, there are no material agreements, apart from those enteredinto in the ordinary course of business carried on or intended to be carried on by us and there are no materialagreements entered into more than two years before the date of this RHP.SubsidiariesAs on the date of this RHP, our Company does not have any Subsidiaries103

OUR MANAGEMENTOur Articles of Association require us to have not less than six and not more than 15 Directors. Our Companycurrently has ten directors on its Board of which three are whole time directors, one is a nominee of the Governmentof India, one is a nominee of Government of Himachal Pradesh and five are independent directors. Our Company’sChairman-cum-Managing Director is Mr. Hemant Kumar Sharma.The following table sets out the current details regarding our Board as on the date of the filing of this RedHerring Prospectus:Name /designation/ DIN/occupationMr. Hemant Kumar Sharma (S/o Mr. Anand SwarupSharma)Chairman and Managing DirectorDIN: 00030716Occupation: ServiceMr. Rajinder Singh Katoch(S/o Mr. Dina Nath Katoch)Director(Personnel)DIN: 00822714Occupation: ServiceMr. Raghunath Prasad Singh(S/o Mr. Rameshwar Singh)Director (Electrical))DIN: 01894041Occupation: ServiceMr. Sudhir Kumar(S/o Mr. Rughan Mal Jain)Non Executive Director- GOI NomineeDIN: 02669103Occupation: ServiceMr. Deepak Sanan(S/o Sh. Satya Paul Sanan.)Non Executive Director - GoHP NomineeDIN: 02830225Occupation: ServiceMr. Kamaljit Singh Gill(S/o Mr. Hari Singh Gill)Independent DirectorDIN: 02196903Occupation: retired as Engineer in Chief, Punjab StateElectricity Board.Mr. S.M. Lodha(S/o Mr. Kalyanmal Lodha)Independent DirectorDIN: 00742185Occupation: Independent Director in various privatesector companies.Mr. Kambhampati Subramanya Sarma(S/o Mr. K.V. Sastry)Independent DirectorDIN: 01505787Occupation: retired as CEO, Prasar Bharti.Mr Ravi DhingraIndependent DirectorAgeUsual Residential Address55 Dhariwal House,Ram Nagar,Shimla, Himachal Pradesh – 171 00458 D-2/2223Vasant KunjNew Delhi – 110 07055 Block - C, Flat No. 493Divyajyoti Apartment,Sector – 19, Rohini,New Delhi – 110 08553 T-6/41, Railway Officers Enclave,San Martin Marg, Chanakyapuri,New Delhi – 110 02153 House No. 10, Type – VKasumpti,Shimla - 17100964 73-A, Sahibjada Ajit Singh NagarMithapur Road, PO Model Town,Jalandhar City (Punjab) – 144 00359 5, PanharWorli Sea FaceMumbai – 400 01866 8-2-677/B/1,Road No. 12, Banjara Hills,Hyderabad – 500 03461 31 Munirka ViharNew Delhi -110 067Other DirectorshipsNILNILNILTHDC India Limited;NHPC LimitedPTC India LimitedNEEPCO LimitedHP Power CorporationLimitedHP Power TransmissionCorporation LimitedNILEssar InformationTechonolgy Limited;India Securities Limited;Essar Securities Limited.,Sangam Agro AcresLimited;Elexir Financial ServicesLimitedGold Stone TechnologiesLimited;KMK Event ManagementLimited;KMK Events (Delhi)LimitedNIL104

Ms Bharti PrasadIndependent Director60 C – 307 Hum Sub ApartmentsPlot No. 14, Sector 4Dwarka, New Delhi110 075NILBrief profile of each of the DirectorsMr. H.K. Sharma, 56 years, is working as the Chairman and Managing Director of the Company since July 18,2005. He joined our Company as Additional General Manager (Civil) on deputation from NHPC Limited. Mr.Sharma is a graduate in civil engineering from Punjab University and a fellow member of Institution ofEngineers, India, Indian Institution of Bridge Engineers and Society of Power Engineers. He has about 33 yearsof professional experience. He began his career with Himachal Public Works Department and has also workedin different capacities in Haryana Irrigation Department, National Hydro Power Corporation and KonkanRailway Corporation. He has been awarded a number of prestigious awards like Indira Gandhi SadbhawanaAward, Hind Gaurav Award, Udyog Ratan Award, Bhartiya Vikas Ratan Award, Leadership Excellence Awardfor National Development and Rashtriya Samman Purskar etc. for his exemplary management of hydro powerprojects. Further, under his leadership SJVNL has also been honored with a number of prestigious awards. Mr.Sharma has presented various technical papers in national and international conferences held in India and abroadon hydropower development.Mr. Rajinder Singh Katoch, 59 years, is on our Board as the Director (personnel) since 25th September, 2006.Mr. Katoch is a post graduate in business administration from Himachal Pradesh University. He has about 34years of experience in various sectors including the power sector. Prior to joining the Company, he was GeneralManager (HR) in Bharat Heavy Electrical Limited. As the Director (personnel), he is in charge of humanresource functions including personnel and administration, corporate monitoring and co-ordination,procurement, legal and resettlement and rehabilitation departments.Mr. Raghunath Prasad Singh, 55 years, is working as the Director (electrical) in the Company sinceNovember 1, 2007. Mr. Singh is a graduate in electrical engineering from Regional Engineering College,Warangal. Prior to joining our Company, he was the Executive Director of North Eastern Electric PowerCorporation Limited for more than 26 years and was associated with corporate planning, monitoring, design,engineering etc. of transmission lines and hydro projects. Mr. Raghunath Prasad Singh has distinction incompleting 100 kilometers of transmission lines in a record time of 18 months besides achieving machineavailability of around 97% of Ranganandi Hydro Electric Plant (405 MW) consecutively for two years i.e. 2004-05 & 2005-06 and earned Bronze Shield for 2004-05 by the Ministry of Power, Government of India underNational Award for meritorious performance. As the Director (Electrical), he is responsible for electrical design,erection, commissioning, electrical contracts, commercial, system operations, quality assurance and inspectionof Nathpa Jhakri Hydro Power Station, Arun-III HEP and Bhutan Projects.Mr. Sudhir Kumar, 54 years, has been non Executive Director on our Board since September 29, 2009 as thenominee of Government of India. Mr. Kumar is an Indian Administrative Services officer and holds a postgraduate degree in commerce from Delhi School of Economics. He has served on various state and centraladministrative positions in various departments including home, energy, commercial, taxation, finance ruralareas and employment, power and railways.Mr. Deepak Sanan, 53 years, has been a non Executive Director on our Board since April 4, 2010 as thenominee of the Government of Himachal Pradesh. Mr. Deepak Sanan is an Indian Administrative ServicesOfficer and is a post graduate in International Politics from Jawaharlal Nehru University, New Delhi. He hasserved on various central and state government administrative positions in various departments/ ministriesincluding public finance, rural development & panchayati raj, water and sanitation, public health etc. andhandled a number of assignments as a consultant with the World Bank including the position of India CountryTeam Leader.Mr. Kamaljit Singh Gill, 64 years, is an independent Director on our Board since May 13, 2008. A graduate inElectrical Engineering from Punjab University, Mr. Kamaljit Singh Gill possesses about 37 years of extensiveprofessional experience in the power sector. He has an experience of 36 years with Punjab State ElectricityBoard in various capacities beginning from Assistant Engineer to the level of Engineer in Chief.Mr. S.M. Lodha, 59 years, is an Independent Director on our Board since May 9, 2008. A Law graduate fromthe University College of Law, Kolkata and a Management graduate from the R.A. Poddar Institute of105

Management, Jaipur. Mr. S.M. Lodha has an experience of 36 years and cross industry exposure in the area offinance, commercial, project implementation etc. in large corporate.Mr. Kambhapati Subramanya Sarma, 66 years, is an Independent Director on our Board since May 2, 2008.He holds a master’s degree in science and master’s degree in arts from Andrha University. A retired IndianAdministrative Services officer, Mr. Sarma has about 44 years of experience and has held various administrativepositions with the Government of Andhra Pradesh and Government of India including in various fields likefinancial management and planning, information and broadcasting and education and retired as the ChiefExecutive Officer of Prasar Bharti.Mr Ravi Dhingra, 61 years, is an Independent Director on our board since March 29, 2010. He holds a master’sdegree in arts from Delhi University and a professional qualification in the management of public sectorenterprises from the University of Manchester in the UK. A retired Indian Administrative Services officer, MrDhingra has 37 years of experience and has held various positions including Secretary to the GOI, Ministry ofHome Affairs, Chief Secretary to the GoHP, Principal Secretary Finance to the GoHP and Chairman of theHPSEB.Ms Bharti Prasad, 60 years, is an Independent Director on our Board since March 29, 2010. She holds an M.Phil. degree from Punjab University, Chandigarh. An Indian Audit & Accounts Service officer, she retired asDeputy Comptroller Auditor General. Ms. Prasad has 38 years of experience and has held various key positionsin Government of India ranging from Accountant General, Uttar Pradesh, Joint Secretary, Ministry of Finance,Principal Accountant General, West Bengal, Calcutta. She is member of Advisory Group on Evaluation ofAudit, International Civil Aviation Organisation, Montreal and International Public Sector Accounting StandardBoard.Borrowing Powers of the Board of Directors of our CompanyIn accordance with the provisions of section 293 (1) (d) of the Companies Act, the borrowing powers of theBoard of Directors are restricted to a sum not exceeding the aggregate of the paid-up capital of the Companyand its free reserves. This restriction on the Directors’ borrowing powers does not include temporary loansobtained from the Company’s bankers in the ordinary course of business. The restriction may be exceeded ifconsent to such is given in a general meeting of the Company.Details of Appointment of our DirectorsName of Directors Appointment Letter/ MoP Order TermMr. Hemant KumarSharmaMr. Rajinder SinghKatochMinistry of Power Order No.13/14/2005-H.II dated July 18,2005Ministry of Power Order No.13/20/2005-H.II dated October 5,2006Appointed as the Chairman and the Managing Director for a period of 5years or date of superannuation whichever is earlier with effect from thedate of assumption of the charge of the postAppointed as a Director for a period of 5 years or date of superannuation,whichever is earlier, with effect from September 25, 2006Mr. Raghunath PrasadSinghMr. Sudhir KumarMr. Deepak SananMr. Kamaljit SinghGillMinistry of Power Order No.13/16/2006-H-II dated September3, 2007Ministry of Power Order No.13/11/2008-H.II (Pt.) datedSeptember 29, 2009Ministry of Power Order No.23/15/2009-H-II dated April, 82010Ministry of Power Order No.13/5/2006-H.II dated May 2, 2008Appointed as a Director for a period of 5 years or date of superannuationwhichever is earlier with effect from November 1, 2007 or the date ofassumption of the charge of the post.Appointed as non executive Director. Tenure not specified in theappointment letter.Appointed as non executive Director. Tenure not specified in theappointment letter.Appointed as an independent Director for a period of 3 years, with effectfrom the date of assumption of the charge of the post or until furtherorders, whichever is earlier:Mr. S.M. LodhaMinistry of Power Order No.13/5/2006-H.II dated May 2, 2008Appointed as independent Director for a period of 3 years, with effectfrom the date of assumption of the charge of the post or until furtherorders, whichever is earlier:106

Mr. KambhampatiSubramanya SarmaMinistry of Power Order No.13/5/2006-H.II dated May 2, 2008Appointed as independent Director for a period of 3 years, with effectfrom the date of assumption of the charge of the post or until furtherorders, whichever is earlier:Mr Ravi DhingraMs Bharti PrasadMinistry of Power Order No.13/5/2006- H- II dated March 29,2010Ministry of Power Order No.13/5/2006- H- II dated March 29,2010Appointed as independent Director for a period of 3 years, with effectfrom the date of assumption of the charge of the post or until furtherorders, whichever is earlierAppointed as independent Director for a period of 3 years, with effectfrom the date of assumption of the charge of the post or until furtherorders, whichever is earlierExcept for our whole-time Directors who are entitled to statutory benefits like gratuity and provident fund upontermination of their employment with us along with certain post retirement medical benefits, no other Director isentitled to any benefit upon cessation of their directorship with us.Relationship between directorsThe Directors of our Company are not related to each otherRemuneration of our DirectorsAs per the AoA of the Company, the Directors shall be paid such salary and/or allowance as the President may,from time to time, determine. Subject to the provisions of Section 314 of the Companies Act, such reasonableadditional remuneration, as may be fixed by the President, may be paid to any one or more of the Directors forextra or special services rendered by him or them or otherwise.Further, pursuant to memoranda issued by the DPE on November 26, 2008 and April 2, 2009 (“MemorandumNo. 1”), and the Presidential directive bearing F. No: 32/11/2009- H.II dated April 30, 2009 (“PresidentialDirective”) the GoI has decided to revise the pay scales of board members and executive officers of centralpublic sector enterprises (“CPSE”), including the Company, retrospectively from January 2007. However, thesame is pending implementation by our Company. Accordingly, the remuneration set forth below for each of theDirectors will be revised.The following table sets forth the details of the gross remuneration for our whole-time directors for Fiscal 2010.Our directors are also entitled to benefits/facilities such as official vehicle, medical reimbursements, leave travelconcession, gratuity, reimbursements for maintenance of a residential office and official entertainment.S. No. NameBasic Salary(Rs.)DearnessAllowance(Rs.)House RentAllowance/Lease(Rs.)Other benefits(Rs.)Gross Total(Rs.)1. Mr. Hemant KumarSharma 360,309 299,385 162,799 597,515 1,420,0082. Mr. Raghunath PrasadSingh 327,600 272,563 73,716 588,187 1,262,0663. Mr. Rajinder SinghKatoch335,200 280,550 75,876 593,721 1,285,3474. Mr. Sudhir Kumar Being nominee Director of the GOI, Mr. Sudhir Kumar draws his remuneration from the GOI.5. Mr. Deepak Sanan Being nominee Director of the GoHP, Mr. Deepak Sanan draws his remuneration from the GoHP.6. Mr. Kamaljit Singh Gill * Travel allowance, daily allowance and a sitting fee of Rs.10,000 per meeting.7. Mr. S.M. Lodha * Travel allowance, daily allowance and a sitting fee of Rs.10,000 per meeting.8. Mr. Kambhampati Travel allowance, daily allowance and a sitting fee of Rs.10,000 per meeting.Subramanya Sarma *9. Mr Ravi Dhingra Travel allowance, daily allowance and a sitting fee of Rs.10,000 per meeting10. Ms Bharti Prasad Travel allowance, daily allowance and a sitting fee of Rs.10,000 per meeting* Pursuant to the meetings of the Board of Directors held on June 3, 2008 and April 20, 2009, independent Directors of the Company areentitled to travel allowance, daily allowance and a fee of Rs. 10,000 for attending each meeting of the Board of Directors, committees ofthe Board of Directors, project review meetings and quarterly review meetings.107

Details of terms and conditions of employment of Company’s DirectorsAs per the AoA of the Company, all members of the Board of Directors shall be appointed by the President ofIndia.The appointment orders indicating the scale of pay and tenure of the Directors have been issued in respect of allthe Directors by the President of India acting through MoP. However, MoP has only issued the detailed termsand conditions of service with respect to Mr. Rajinder Singh Katoch by its letter (bearing reference no.13/20/2005-H-II) dated July 4, 2007 (“Letter”). For other Directors, the detailed terms and conditions are yet tobe issued by the MoP.Some of the important terms and conditions of service of Mr. Rajinder Singh Katoch as set out in the Letter arebriefly summarised below:Period: The period of appointment will be 5 years w.e.f. September 25, 2006 in the first instance or till the ageof superannuation or until further orders, whichever event occurs earlier and in accordance with the provisionsof the Companies Act. The appointment may, however, be terminated even during this period by either side on 3months notice or on payment of three months salary in lieu thereof.After the expiry of the first year, the performance of Mr Rajinder Singh Katoch will be reviewed to enable theGovernment to take a view regarding continuance or otherwise for the balance period of tenure.Headquarters: Headquarters will be at Shimla where the registered office/ headquarters of the Company islocated. Mr. Rajinder Singh Katoch will be liable to serve in any part of the country at the discretion of the PSE.Further as per the Letter, in addition to the basic pay, Mr. Rajinder Singh Katoch would also be entitled toDearness Allowance, residential accommodation/ payment of House Rent Allowance and recovery of rent forthe accommodation provided, City Compensatory Allowance, annual increments, conveyance and other benefitsand perquisites such as medical facilities, Traveling Allowance, Leave Travel Concession, Disability Leave etc.in accordance with the rules of the Company.Conduct, discipline and appeal rules:The conduct, discipline and appeal rules framed by the Company in respect of their non-workmen category ofstaff would also mutatis mutandis apply to Mr. Rajinder Singh Katoch with the modification that thedisciplinary authority in his case would be the President.The Government also reserves the right not to accept their resignation if the circumstances so warrant i.e. thedisciplinary proceedings are pending or a decision has taken by the competent authority to issue a charge sheetto them.Restriction on joining private commercial undertaking after retirement:Mr. Rajinder Singh Katoch after retirement from the service of the Company shall not accept any appointmentor post, whether advisory or administrative, in any firm or company whether Indian or foreign, with which theCompany has or had business relations, within two years from the date of his retirement, without prior approvalof the Government.Shareholding of Directors in the CompanyOur Articles do not require our Directors to hold any qualification shares. The following table details theshareholding of our Directors in the Company as on the date of filing of this Red Herring Prospectus:Sr. No. Name No. of Shares held(Face Value: Rs.10)Shareholding(%)1 Mr. Hemant Kumar Sharma* 100 Negligible2 Mr. Raghunath Prasad Singh* 100 Negligible108

3 Mr. Sudhir Kumar* 100 Negligible4 Mr. Rajinder Singh Katoch * 100 Negligible5. Mr. Deepak Sanan* 100 Negligible* Held on behalf of the President of IndiaInterest of our DirectorsAll of our Directors may be deemed to be interested to the extent of remuneration and fees paid to them forservices rendered as a Director of the Company as well as to the extent of reimbursement of expenses, if any,payable to them.All our Directors may be deemed to be interested to the extent of Equity Shares that may be subscribed for andallotted to them, out of the present Offer in terms of this Red Herring Prospectus. Such Directors may also bedeemed to be interested to the extent of any dividend payable to them and other distributions in respect of thesaid Equity Shares.Our Directors have no interest in any property acquired by us within two years of the date of filing of this RedHerring Prospectus, except as stated in the section titled, “Financial Statements-Related Party Transactions”on page 1.Further, pursuant to the meetings of the Board of Directors held on June 3, 2008 and April 20, 2009, theindependent Directors of the Company are entitled to travel allowance, daily allowance and a fee of Rs. 10,000for attending each meeting of the Board of Directors, committees of the Board of Directors, project reviewmeetings and quarterly review meetings.Changes in our Board of Directors during the last three yearsThe changes in our Board of Directors in the last three years are as follows:Name Date of Appointment Date of Cessation/ Change Reason for Cessation/ ChangeMr. Gurdial Singh January 12, 2005 December 24, 2009 Nomination withdrawn by theMoPMr. Mrutunjay Sahoo July 30, 2002 June 29, 2007 Nomination withdrawn by theMoPMr. Anil Kumar Kutty June 10, 2003 August 14, 2008 Nomination withdrawn by theMoPMr. Jai Prakash NegiMarch 17, 2004 January 2, 2008Nomination withdrawn by theMoPMr. Ramji Das Prabhakar November 30, 2005 October 31, 2007 SuperannuationMr. Sutanu Behuria March 31, 2006 May 5, 2007 ResignationMr. Jatinder Kumar Sharma June 14, 2006 April 9, 2009 ResignationMr. Rajinder Singh Katoch September 25, 2009 Continuing -Mr. K. K.Garg May 7, 2007 November 3, 2009 ResignationMr. Arvind MehtaJuly 12, 2007 September 22, 2009Nomination withdrawn by theMoPMr. Rajesh VermaJuly 23, 2007 March 26, 2009Nomination withdrawn by theMoPMr. Jayant Shriniwas KawaleSeptember 3, 2007 September 29, 2009Nomination withdrawn by theMoPMr. Raghunath Prasad Singh November 1, 2007 Continuing -Mr. Ajay MittalApril 11, 2008 May 19, 2009Nomination withdrawn by theMoPMr. Kamaljit Singh Gill May 2, 2008 Continuing -Mr. S.M. Lodha May 2, 2008 Continuing -Mr. Kambhampati SubramanyaSarma May 2, 2008 Continuing-109

Mr. Ajay TyagiNomination withdrawn by theOctober 6, 2009 April 8, 2010MoPMr. Sudhir Kumar September 29, 2009 Continuing -Mr Ravi Dhingra March 29, 2010 Continuing -Ms Bharti Prasad March 29, 2010 Continuing -Mr Deepak Sanan April 8, 2010 Continuing -Corporate GovernanceThe provisions of the Listing Agreement to be entered into with the Stock Exchanges and the SEBI ICDRRegulations in respect of corporate governance will be applicable to the Company immediately upon the listingof the Equity Shares on the Stock Exchanges. The Company has complied with the corporate governancerequirements in accordance with Clause 49 of the Listing Agreement, in relation to the constitution of the auditcommittee, the investors’ grievance committee,the remuneration committee and the appointment of independentDirectors . Further the Company has a code of conduct in place which is complied by the Board of Directors andthe senior management of the Company.The Board functions either as a full Board or through various committees constituted to oversee specificoperational areas.In terms of the Clause 49 of the Listing Agreement, the Company has constituted the following committees:Audit CommitteeThe Audit Committee was originally constituted by the Board of Directors in their meeting held on October 26,2006 (“Audit Committee”). The present Audit Committee was re-constituted by the Board of Directors in theirmeeting held on April 13, 2010. The Audit Committee is in compliance with Clause 49 of the ListingAgreement and comprises the following members:Name of the Director Designation Position in CommitteeMr. Kambhampati Subramanya Sarma Independent Director ChairpersonMr. S.M. Lodha Independent Director MemberMr. Kamaljit Singh Gill Independent Director MemberMr Deepak Sanan GoHP nominee MemberThe terms of reference of the Audit Committee is in accordance with the Companies Act, Guidelines onCorporate Governance issued by the Department of Public Enterprises and the Listing Agreement as amendedfrom time to time and include the following:(a) Overseeing our financial reporting process and the disclosure of our financial information toensure that the financial statement is correct, sufficient and credible;(b) Recommending the Board regarding the fixation of the audit fee;(c) Approving of payment of statutory auditors for any other services rendered by them;(d) Reviewing with the management the quarterly and annual financial statements before submissionto the Board;(e) Reviewing with the management, external and internal auditors, the adequacy of internal controlsystems;(f) Reviewing the adequacy of internal audit function, including the structure of the internal auditdepartment, staffing and seniority of the official heading the department, reporting structure,coverage and frequency of internal audit;(g) Discussing with internal auditors regarding any significant findings and follow up thereon;(h) Reviewing the findings of any internal investigations by the internal auditors into matters wherethere is suspected fraud or irregularity or a failure of internal control systems of a material natureand reporting the matter to the Board;(i) Discussing with external auditors before the audit commences, nature and scope of the audit, aswell as have post audit discussion to ascertain any area of concern;110

(j) Reviewing our financial and risk management policies;(k) Looking into the reason for substantial defaults in payments to depositors, debenture holders,shareholders and creditors;(l) Reviewing the functioning of the whistle blowing mechanism, in case the same is formulated;(m) Reviewing, with the management, the statement of uses/application of funds raised through anissue (public issue, rights issue, preferential issue, etc.), the statement of funds utilised for thepurposes other than those stated in the offer document/prospectus/notice and the report submittedby the monitoring agency monitoring the utilisation of proceeds of public or rights issue andmaking appropriate recommendations to the board to take up steps in this matter; and(n) Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.The Audit Committee is required to meet at least four times in a year, i.e. once before the finalisation ofannual accounts and once in every six months. The quorum for the meetings is two members or onethird of the total number of members, whichever is higher, provided there is a minimum of twoindependent members present.Shareholders/ Investor Grievance CommitteeThe Investor Grievance Committee was constituted by the IPO Committee in their meeting held on March 29,2010 (“Investor Grievance Committee”). The Investor Grievance Committee is in compliance with Clause 49of the Listing Agreement and comprises the following members:Name of the Director Designation Position in CommitteeMs Bharti Prasad Independent Director ChairpersonMr Hemant Kumar Sharma Chairman and Managing Director MemberMr Ravi Dhingra Independent Director MemberThe terms of reference of the Investor Grievance Committee is in accordance with the Companies Act,Guidelines on Corporate Governance issued by the Department of Public Enterprises and the Listing Agreementas amended from time to time and include the following:(a) Redressal of investors’ complaints;(b) Allottment of shares, approval of transfer or transmission of shares, debentures or any other securities;(c) Issue of duplicate certificates and new certificates on split/ consolidation/ renewal, etc;(d) Non-reciept of declared dividends, balance sheets of the Company, etc; and(e) Carrying out any other function contained in the Listing Agreement as and when amended from time totimeThe Investor Grievance Committee is required to meet at least four times in a year with a maximum interval offour months between two meetings. The quorum for the meetings is two members personally present.Remuneration CommitteeAs per the DPE’s office memorandum no.2 (70)/08-DPE (WC) dated November 26, 2008 (“MemorandumNo.2”), the constitution of a Remuneration Committee is mandatory for the Company. Accordingly, aRemuneration Committee was constituted by the Board of Directors in its meeting dated March 4, 2009.However, the committee was reconstituted due to the resignation of one of the members and according as on thedate of the Red Herring Prospectus, the said committee comprises of following members:Name of the Director Designation Position in CommitteeMr. Kamaljit Singh Gill Independent Director ChairpersonMr. Rajinder Singh Katoch Director, Personnel MemberMr. Hemant Kumar Sharma * Director, Finance Member* Mr. H.K. Sharma (Chairman and Managing Director) assumed the additional charge of Director, Finance pursuant to the resignation ofMr. K.K. Garg as a Director of the Company with effect from November 3, 2009. Accordingly, Mr. H.K. Sharma replaced Mr. K.K. Garg asa member of the Remuneration Committee.111

The Remuneration Committee looks into all proposals relating to pay and allowances of employees covered bythe Memorandum No.2.The scope of Remuneration Committee is to decide and approve the matters relating to performance related payof the employees.Code of ConductThe Board of Directors in their meeting held on June 27, 2008 approved and adopted the Code of Conduct andEthics (“Code”) which is compliant with Clause 49 of the Listing Agreement. The Code is to be complied bythe Directors and the senior management of the Company above the level of Deputy General Manager and isavailable on the website of the Company. Further, all the Directors and senior management personnel affirmcompliance with the code on an annual basis. The Annual Report of the Company for the financial year 2008-09contains a declaration to the effect of such compliance signed by the Chairman and Managing Director(“CMD”).Some of the important provisions of the Code inter alia are mentioned below:In performing the functions as a member of the Board and/or a member of senior management team, suchmember:1. shall act with utmost care, skill and diligence in a fair, reasonable and bonafide manner, maintaininghigh standards of integrity in all its activities and dealings in the best interest of the Company and itsstakeholders;2. shall act in an ethical manner, confirming to the accepted professional standards fulfilling the fiduciaryobligations;3. shall comply with all the applicable provisions of existing local, state, national, and international laws,the policies, procedures, rules and regulations relating to business;4. shall be scrupulous in avoiding conflicts of interest with the Company. Any situation that involves, ormay reasonably be expected to involve, a conflict of interest with the Company shall be disclosedpromptly to the competent authority;5. shall not use the information acquired or gained during the conduct of the business of the Company forpersonal advantage;6. shall not seek or accept directly or indirectly any offer, payment, gift or anything of value fromcustomers, vendors consultants etc. that could reasonably appear to have been made to influence anybusiness decision;7. shall not engage in making any adverse criticism of any policy or action of the Government or of theCompany that is likely to prejudice the Company's business, fellow Directors, Senior Management orother staff; and8. shall maintain the confidentiality of all information entrusted to him or that comes to him except whendisclosure is authorised or is warranted by law.Other CommitteesIPO CommitteeThe IPO Committee was constituted by the Board in its meeting dated February 16, 2010 for exercising powersand taking decisions as may be required in the IPO process. It comprises of Mr Hemant Kumar Sharma, MrRajinder Singh Katoch and Mr Raghunath Prasad Singh as its members.112

The terms of reference of the IPO committee include that the committee be formed with a quorum of any two(2) directors to take all decisions and approve all matters relating to the IPO as it may, in its absolute discretion,deem fit and proper in the best interest of the Company, including:a. Timing, recommendation for pricing of the offer to the Board/ Empowered Group of Ministers (“EGoM”)and terms and conditions of the offer of the shares, reservation for employees and including the price, andto accept any amendments, modifications, variations or alterations thereto;b. Constitution/ re-constitution of committees as per the Listing Agreement of the stock exchanges;c. Determine and recommend (as applicable) to the Board/ EGoM for the floor price/ price band for theOffer, Bid/Offer Opening Date and Bid/Offer Closing Date, Offer Price, approve the basis of allocationand confirm allocation of equity shares to various categories of persons as disclosed in the Red HerringProspectus, Red Herring Prospectus and Prospectus, in consultation with the BRLMs and do all such actsand things as may be necessary and expedient for and incidental and ancillary to, the offer;d. Entering into arrangements with the book running lead managers, underwriters, syndicate members,brokers, escrow collection bankers, registrars, IPO grading agency, legal advisors and any other agenciesor persons whose appointment is required in relation to the IPO;e. Issuing advertisements in such newspapers as it may deem fit and proper about the future prospects of thecompany and the proposed offer conforming to the guidelines and regulations issued by SEBI in thisregard;f. Opening separate current accounts with scheduled banks for receiving applications along with applicationmonies in respect of the offer of the shares of the Company, as required;g. Signing and executing the agreements with the book running lead manager and the registrar respectively,syndicate agreement, escrow agreement and the underwriting agreement and any other deeds, documentsand agreements required in relation to the IPO;h. Making applications to the RBI, FIPB and such other authorities, as may be required, for the purpose of theoffer of shares to non-resident investors, including NRIs and FIIs pursuant to the IPO;i. Making applications for listing of the equity shares of the Company in one or more stock exchange(s) andto execute and to deliver or arrange the delivery of the listing agreement(s) or equivalent documentation tothe concerned stock exchange(s);j. Do or authorize its officers to do all such deeds and acts as may be required to dematerialize the equityshares of the Company and to sign agreements and/or such other documents as may be required withNational Securities Depository Limited (“NSDL”), Central Depository Services (India) Limited (“CDSL”)and such other agencies, as may be required in this connection;k. Finalizing the basis of allocation and allotting/ transferring the equity shares to the successful allottees andissue of share certificates/ transferring shares to demat account of successful allottees in accordance withthe relevant rules;l. Settling all questions, difficulties or doubts that may arise in relation to the IPO as it may in its absolutediscretion deem fit; andm. Submitting undertakings/certificates or providing clarifications to the SEBI and the relevant stockexchanges where the equity shares of the Company are to be listed.n. Authorizing/delegating powers to the representatives of Company to take necessary action for the purposesof the IPO.Empowered CommitteeThe Empowered Committee was constituted by the Board in its meeting dated September 15, 2008 forexercising powers delegated to it from time to time. It comprises of the CMD and the all the other whole timeDirectors as its members.Investment CommitteeThe Investment Committee was constituted by the Board in its meeting dated September 13, 2004 for decidinginvestments of surplus funds from revenue receipts. It comprises CMD, Director (Personnel) and the Director(Finance) or, in the absence of the Director (Finance), the GM (Finance) or senior most functionary in Financedepartment as its members.Sub Committee for Allotment/ Transfer of Equity SharesThe sub committee for Allotment/ Transfer of Equity Shares was initially constituted by the Board in its meetingdated December 30, 1996, for managing the allotment and transfer of Equity Shares. Thereafter, this committee113

has been reconstituted from time to time. The present committee was reconstituted by the Board in its meetingdated November 30, 2009 and comprises of the CMD and Director (Personnel) as its members.Organisation Structure:114

Key Managerial EmployeesAll of our key managerial employees are permanent employees of our Company and none of them are related toeach other or to any Director of our Company.The remuneration payable to our key managerial personnel is subject to change pursuant to Memoranda No. 1and the Presidential Directive. Accordingly, the remuneration set forth below for each of the key managerialpersonnel may be revised.Our key managerial personnel include the following:Mr. K.C. Sadyal, an IPS Officer, 55 years, is designated as Chief Vigilance Officer (“CVO”) in the Company.He holds a masters degree in arts (English) from Jaipur University. He has been associated with the Companysince May 2005. He joined Indian Army as lieutenant in 1975. Subsequently he left the Army in 1983 andjoined Indian Police Service (“IPS”) in 1986, as HP Cadre IPS Officer. He has served as superintendent ofpolice in four districts of Himachal Pradesh and as Deputy Inspector General (“DIG”) of the Dharamshalarange. Immediately prior to joining SJVN as CVO, he held the position of DIG, Shimla range. Later, during hisservice stint in SJVN, he was promoted as inspector general of police in 2007. He has been awarded withvarious awards like the President Meritorious Police Service award, Prime Minister Life saving award, Chief ofArmy Staff commendation medal, commendation certificate with cash award of Rs. 25,000 by Governor HP forprotecting the interests of under privileged in the society, and was also declared as the best CVO during 2009,by the Central Vigilance Commission. Mr. K.C. Sadyal's remuneration as CVO, for the Fiscal year 2009-10including all benefits was Rs. 1.10 million.Mr. P. S. R. Murthy 58 years, is designated as Company Secretary. He holds a bachelors degree in commercefrom Andhra University. He is a member of the Institute of Company Secretaries of India. He joined ourCompany as company secretary w.e.f. March 18, 1996. During his tenure, he has handled all matters regardingCompany affairs. Immediately prior to joining our Company, he was holding the position of Company Secretarywith Bharat Refractories Limited. Mr. Murthy's remuneration as Company Secretary for the Fiscal year 2009-10including all benefits was Rs. 1.32 million.Mr. R. S. Chauhan 59 years, is designated as Executive Director (Civil Design-I). He holds bachelors degree incivil engineering from Institute of Technology, Benaras Hindu University, Varanasi and masters degree in waterresource development from Water Resources Development and Management, Indian Institute of Technology,Roorki. He has been associated with our Company since August 1992 (Upto February 21, .2005 on deputationbasis). Prior to his current position, he held the position of General Manager (Civil Design -I) in the Company.During his tenure, he has handled several major assignments including preparation of project reports, design ofdesilting complex including hydraulic design, support system etc. Immediately prior to joining our Company, hewas holding the position of Chief Engineer with HPSEB. Mr. Chauhans's remuneration as General Manager /Executive Director for the Fiscal year 2009-10 including all benefits was Rs. 1.13 million.Mr. Nand Lal Sharma, 45 years, an officer of HP State Administrative Services, is working on deputation withthe Company as the Executive Director (human resources). He holds a masters degree in business administrationfrom the University of Ljublijana, Slovenia. He joined our Company as Executive Director (human resources)w.e.f. July 28, .2008. During his tenure, he has handled all corporate human resources matters. Immediatelyprior to joining our Company, he was holding the position of special secretary (General AdministrationDepartment and Health) and Director Ayurveda with GoHP. Mr. Sharma's remuneration as Executive Director(human resource) for the Fiscal year 2009-10 including all benefits was Rs. 0.81 million.Mr. N. C. Bansal, 49 years, is designated as GM (Project). He holds a bachelors degree in electricalengineering from Kurukshetra University. He joined our Company as Manager w.e.f. January 18, 1995. Prior tohis current position, he held the position of Assistant General Manager in the Company. During his tenure, hehas handled several major assignments including works of erection and commissioning of generating plant andequipment of hydro electric power project, contract handling / management of electro mechanical packages,commercial matters regarding operation of hydro electric projects, customs clearances, rehabilitation andresettlement issues, environmental issues and finance and personnel matters. In 2009 he was awarded theRashtriya Gaurav Award by the India International Friendship Society for outstanding leadership in theabovementioned fields. Immediately prior to joining our Company, he was holding the position of deputymanager with NTPC Limited. Mr. N.C. Bansal’s remuneration for the Fiscal year 2009-10 including all benefitswas Rs. 1.54 million.115

Mr. R K Agarwal, 53 years, is designated as General Manager (Commercial and System Operations). He holdsbachelors degree in electrical engineering from GB Pant University. He joined our Company as Senior Managerw.e.f. November 22, 1995. Prior to his current position, he held the position of general manager (electricalcontract) in the Company. During his tenure, he has handled several major assignments including contractmanagement, operation and maintenance of electrical system, erection and commissioning of power house andmaterial management, etc. Immediately prior to joining our Company, he was holding the position of managerwith THDC India Limited. Mr. Agarwal's remuneration as General Manager for the Fiscal year 2009-10including all benefits was Rs. 1.41 million.Mr. S C Agarwal, 49 years, is designated as general manager (Uttarakhand Projects). He holds a bachelorsdegree in civil engineering from BITS, Pilani. He joined our Company as manager w.e.f. March 4, 1996. Priorto his current position, was the Additional General Manager (civil contracts) in the Company. During his tenure,he has handled several major assignments including contract management, claims management, disputeresolution, extension of time analysis- arbitration, business development and project management, etc.Immediately prior to joining our Company, he was holding the position of deputy manager in NMDC Limited.Mr. Agarwal's remuneration as general manager for the Fiscal year 2009-10 including all benefits was Rs. 1.23million.Mr. S. P. Singh, 58 years, is designated as General Manager (Corporate Monitoring and Co-ordination). Heholds a bachelors degree in mechanical Engineering from GB Pant University and a masters degree intechnology from Indian Institute of Technology Kanpur. He joined our Company as Deputy General Managerw.e.f. April 9, 1996. Prior to his current position, he held the position of assistant general manager in theCompany. During his tenure, he has handled several major assignments including contract and materialmanagement, project management, quality assurance and inspection, environment management, and corporatemonitoring and communication. Immediately prior to joining our Company, he was holding the position ofsenior manager with NTPC Limited. Mr. Singh's remuneration for the Fiscal year 2009-10 including all benefitswas Rs. 1.33 million.Mr. R. K. Bansal, 49 years, is designated as General Manager (Information Technology and Computers/Quality Assurance and Inspection). He holds a bachelors degree in mechanical engineering from MNREC (NowNIT Allahabad) and a masters in business Administration from Indian Institute of Management, Calcutta. Hejoined our Company as manager w.e.f April 7, 1997. Prior to his current position, he held the position ofGeneral Manager (Commercial and System Operations) in the Company. During his tenure, he has handledseveral major assignments including interdisciplinary expertise in commercial, corporate planning, corporatemonitoring and system operation functions, liaison work with various beneficiaries, CERC, MoP, PFC andWorld Bank. Immediately prior to joining our Company, he was holding the position of Manager with BharatHeavy Electrical Limited. Mr. Bansal's remuneration for the Fiscal year 2009-10 including all benefits was Rs.1.68 million.Mr. K. S. Malhotra, 57 years, is designated as General Manager (Finance and Accounts). He is a qualifiedchartered accountant. He joined our Company as General Manager (Finance and Accounts). During his tenure,he has handled all corporate financial matters. Immediately prior to joining our Company, he was holding theposition of assistant general manager with THDC India Limited. Mr. Malhotra's remuneration for the fiscal year2009-10 including all benefits was Rs. 1.10 million.Mr Avinash Kumar, 59 years, is designated as General Manager of the Luhri Project. He holds a bachelorsdegree in Civil Engineering from the Regional Engineering College (now National Institute of Technology)under Kurukshetra University. He has been associated with our Company since its inception. During his tenure,he has handled several major assignments including the construction of tunnels, quality control and assurance ofsafety, hydrology, tunnelling and investigation. Immediately prior to joining our Company, he held the positionof Safety Engineer with HPSEB. Mr Kumar’s remuneration for the Fiscal year 2009-10 including all benefitswas Rs. 1.0 million.Mr Surender Pathak, 49 years, is designated as General Manager (Electrical Design). He holds a bachelorsdegree in electrical engineering from Maulana Azad College Institution under Bhopal University. He has beenassociated with our Company since June 6, 2006. During his tenure, he has handled several major assignmentsincluding maintenance of power house of NJHPS and electrical design. Immediately prior to joining ourCompany, he held the position of Deputy General Manager with Power Grid Corporation of India Limited. MrSurender Pathak’s remuneration for the Fiscal year 2009-10 including all benefits was Rs. 1.56 million.116

Mr H.B. Sahay, 53 years, is designated as GM (Corporate Planning). He holds a bachelor of science degree incivil engineering from Bihar College of Engineering, Patna. He joined our company as Manager (Construction)in March 1996. He has a total experience of 29 years including 13 years in SJVN Limited. During his tenure, hehas handled several major assignments including construction of power house and corporate planning.Immediately prior to joining the Company, he held the position of Manager (Plannign and Co-ordination) NR-Iwith PGCIL. Mr. H.B. Sahay’s remuneration for the fiscal year 2009-10 including all benefits was Rs. 1.31millionMr A.K. Chadha, 52 years, is designated as GM (Geology). He holds a Masters degree in Geology fromRajasthan University. He joined our company as Deputy General Manager in June 1993. He has an experienceof 31 years including 16 years in SJVN Limited. During his tenure, he has handled several major assignmentsincluding geological works of Nathpa Jhakri HEP and other projects. Immediately prior to joining SJVNLimited, he held the position of Deputy Manager (Geology) with NHPC Limited. Mr. A.K. Chadha’sremuneration for the fiscal year 2009-10 including all benefits was Rs. 1.62 million.Shareholding of the key managerial employeesNone of our key managerial employees hold any Equity Shares in our Company.Bonus or profit sharing plan for our key managerial employeesThe Company has a performance linked incentive scheme in effect from April 1, 2007 called SJVNPerformance Linked Incentive Scheme (“Scheme”). Under the Scheme the regular employees including thedeputationists at the power stations, projects under construction (for which CCEA approval has been obtained)and the corporate office are entitled to incentive based on various parameters like milestones achieved, capacityindex (as defined under the CERC regulations) etc. Such incentive is paid quarterly and annually. The Scheme isnot applicable to any apprentices (including the apprentices under the Apprentices Act) and the casualemployees. Further, the incentive amount under the Scheme is not counted towards any service benefits i.e.computation of house rent allowance, compensatory allowance, leave encashment, provident fund, pension orgratuity etc.Changes in our key managerial employees during the last three yearsThe changes in our key managerial employees during the last three years prior to the date of filing this RedHerring Prospectus are as follows:Sr. Name (Mr.) / DesignationNo.1. S C Padhy (General Manager,Personnel)Date of appointment as KeyExecutiveDate ofCessationJanuary 6, 2006 February 27,2009Reason2. H.B Sahay March 30, 2010 - Promotion3. S. Pathak March 30, 2010 - Promotion4. Avinash Kumar March 30, 2010 - Promotion5. A.K. Chadha March 30, 2010 - PromotionEmployees Share Purchase Scheme/Employee Stock Option SchemeResigned to join MCL as Director(Personnel)Currently, we do not have any stock option scheme or stock purchase scheme for the employees of ourCompany.Payment or benefit to officers of our Company1 In addition to the salary employees are granted allowances of the following nature:(a)(b)Special Compensatory (Remote Locality) Allowance- for employees deputed to remote locations onCompany workProject Allowance- to compensate employees for the lack of amenities at project sites117

(c)(d)(e)(f)(g)(h)(i)Incentive Scheme for serving at non-family locationsNightshift AllowanceDress Code and Washing AllowanceCity Compensatory AllowanceNon-practicing Allowance- for medical practitioners in full-time employment with SJVNCash Handling Allowance- for employees discharging duties of Cashier andHouse Rent AllowanceIn addition to the above, employees are also granted additional perks and benefits such as expenditure onlunch, tea, newspapers, literature, conveyance, repair and maintenance of vehicle, official travel, leavetravel concession, children’s education, electricity etc.2.Leave Encashment3. GratuityThe employees of our Company having unavailed earned leaves at the end of a financial year areentitled to encash such leaves. A provision for leave encashment is made in the books of account on thebasis of actuarial valuation certificate obtained by our Company.The Payment of Gratuity Act, 1972 and rules thereunder are applicable to all establishments in whichten or more persons are employed. Gratuity is payable to all employees who have rendered at least fiveyears of continuous service on the termination of his/her employment or if the employee dies or isdisabled due to accident or disease even prior to the said period of 5 years. Gratuity is payable at therate of 15 days wages for every year of completed service, with a maximum limit of 40 times the 15 daywages or Rs. 350,000. For the purpose of gratuity, wages means all emoluments which are earned by anemployee while on duty or on leave in accordance with the terms and conditions of his employment andwhich are paid or are payable to him in cash and includes dearness allowance but does not include anybonus, commission, house rent allowance, overtime wages and any other allowance.We have constituted the Satluj Jal Vidyut Nigam Gratuity Fund as an irrevocable trust made solely forthe provision of gratuity to our employees. The fund is managed by a board of trustees appointed by theCompany including a representative of the Finance and Personnel wings of the Company. We havemade provisions in our books of account as on December 31, 2009 for gratuity payment liability basedon actuarial certificate, which quantifies the gratuity liability for 997 employees at Rs. 155,130,193.4.Employees Provident FundsThe Employees Provident Funds and Miscellaneous Provisions Act, 1952 provides for three differentschemes for the benefit of workers, namely, the provident fund scheme, the pension scheme and thedeposit linked insurance scheme.a. The Provident Fund SchemeThis scheme is applicable to all employees and contract labour of establishments employingtwenty or more persons. Under the said scheme, the employer is required to contribute 12% ofbasic wages, dearness allowance and retainer allowance.b. The Pension SchemeThis scheme is applicable to all establishments covered by the said act and the employer isrequired to contribute up to 8.33% of the wages of the employee.c. Deposit Linked Insurance Scheme118

This scheme is also applicable to all establishments covered by the said act and employers arerequired to make contributions in this behalf at the prescribed rates.We have been making regular PF payments.5 Employee InsuranceWe have the following insurance policies in place for the welfare of the employees:i. Group Insurance Scheme- this scheme provides insurance coverage to employees in case ofdeath of the employees during the tenure of their service at SJVN. The premium for thisinsurance scheme is payable by the Company and is inclusive of the insurance coverage to beprovided by the Company under the Employees Deposit Linked Insurance Scheme, 1976prescribed under the Employees Provident Funds and Miscellaneous Provisions Act, 1952ii.iii.iv.Group Personal Accident Insurance Scheme- this scheme provides insurance coverage to theemployees in the event of all types of personal injuries to employees at all times, all locations,irrespective of whether the employee is in the duty of the Company or not and independent ofany cause. The premium for this insurance scheme is payable by the Company.SJVN Employees (Self Contributory) Superannuation Scheme- This scheme, provides theemployees with a pension in the event of death, retirement, leaving the service, death duringthe service.The premium is payable by the employees under this scheme.SJVN Employees (Self Contributory) Group Saving Linked Insurance Scheme- Under thisscheme, LIC provides the employees with insurance coverage in the event of the death,resignation or the retirement of the employee. The premium is payable by the employeesunder this scheme.v. SJVN Employees Death Relief Scheme- this scheme provides for compensation to thefamilies of those SJVN employees who die of natural causes while in the employment of thecompany. The benefits accrue to the nominee of the member employee who receives anamount equivalent to one day’s salary (basic + DA) of all the employees who are the membersof the scheme along with a matching contribution by the Company. This scheme is not beapplicable in case of accidental death which is covered by Group Personal Accident InsuranceScheme.vi.SJVN Employees (Housing Building Advance) Group Insurance Scheme- Under this scheme,the Company pays the premium to LIC for insuring the housing building advance availed bythe employees from the Company. In the event of death of the employee, LIC remits back theoutstanding house building advance taken as loan by the employee to the Company.Arrangements and Understanding with major shareholders, customers, supplies or others as to theAppointment of Key Managerial Personnel as the director or member of senior managementWe do not have any arrangements or understanding with our major shareholders, customers, supplies or othersas to the appointment of Key Managerial Personnel as the director or member of senior management.119

OUR PROMOTERSOur Promoters are the President of India acting through the MoP, GoI and the Governor of Himachal Pradesh.Our majority Promoter, the GoI (including through nominees) currently holds 74.50% of the paid-up sharecapital and will continue to hold majority of the post-Offer paid-up capital of our Company. The Governor ofHimachal Pradesh (including through nominees) currently holds the remainder 25.50% of the paid-up sharecapital of the Company.120

DIVIDEND POLICYThe declaration and payment of dividends on our equity shares will be recommended by our Board andapproved by our shareholders, at their discretion, and will depend on a number of factors, including but notlimited to our profits, capital requirements and overall financial condition. For the dividend and dividend taxpaid by our Company during the last five Fiscal years Please refer to the section titled “Financial Information”on page F-25The amounts paid as dividends in the past are not necessarily indicative of our dividend policy or dividendamounts payable, if any, in the future.Pursuant to the terms of our loan agreements with some of our lenders, we cannot declare or pay any dividend toour shareholders during any financial year unless we have paid all the dues to the respective lenders or paid orhave made satisfactory provisions thereof or if we are in default of the terms and conditions of such loanagreements.121

RELATED PARTY TRANSACTIONSFor details of the related party transactions, see section titled “Financial Statements-Statement of RelatedParty Transactions” on page F-1.122

SECTION V – FINANCIAL INFORMATIONAUDITORS’ REPORT ON RESTATED FINANCIAL STATEMENTSTo,The Board of Directors,SJVN Limited,Himfed Building,New Shimla 171 009Dear Sirs,We have examined the restated financial information of SJVN Limited (formerly - Satluj Jal Vidyut NigamLimited) (“the Company”) described below in A and B and annexed to this report, stamped and initialled by usfor identification, which has been prepared in accordance with the requirements of paragraph B(1) of Part II ofSchedule II to the Companies Act, 1956 (”the Act”), the Securities and Exchange Board of India (Issue ofCapital and Disclosure Requirements) Regulations, 2009 (the “SEBI-ICDR Regulations”) notified on August26, 2009, the Guidance Note on Reports in Company Prospectuses (Revised) issued by the Institute of CharteredAccountants of India (“ICAI”) and terms of engagement agreed upon with you in connection with the ProposedInitial Public Offering of Equity Shares (“the Offer”).These financial information relating to the Company are proposed to be included in the Offer Document of theCompany in connection with the proposed Offer and have been approved by the Board of Directors.These restated financial information have been extracted from audited financial statements of the Company as atand for the nine months period ended December 31, 2009 and years ended March 31, 2009, March 31, 2008,March 31, 2007, March 31, 2006 and March 31, 2005 which have been approved/adopted by the Board ofDirectors/Members for the respective years. Audits of the financial statements as at and for the years endedMarch 31, 2009 and March 31, 2008 were conducted by M/s R. Bansal & Co., Chartered Accountants, as at andfor the year ended March 31, 2007 by M/s Raj Gupta & Co., Chartered Accountants, and as at and for the yearsended March 31, 2006 and March 31, 2005 by M/s Pandey Dua & Mathur, Chartered Accountants, being theauditors of the Company for the respective periods, and accordingly reliance has been placed on the financialstatements audited and reported upon by them for the said period.A. Financial Information as restated on the basis of Audited Financial Statements:We have examined:a) the attached restated Statement of Assets and Liabilities as at December 31, 2009, March 31, 2009,March 31, 2008, March 31, 2007, March 31, 2006 and March 31, 2005 (Annexure-I);b) the attached restated Statement of Profits and Losses for nine months ended December 31, 2009 and forthe years ended March 31, 2009, March 31, 2008, March 31, 2007, March 31, 2006 and March 31,2005 (Annexure-II);c) the attached restated Statement of Cash Flows for nine months ended December 31, 2009, and for theyears ended March 31, 2009, March 31, 2008, March 31, 2007, March 31, 2006 and March 31, 2005(Annexure-III);together referred to as the “Restated Summary Statements”.The Restated Summary Statements for the above period were examined to the extent practicable, for the purposeof audit of financial information in accordance with the Auditing and Assurance Standards issued by theInstitute of Chartered Accountants of India. Those Standards require that we plan and perform our audit toobtain reasonable assurance, whether the financial information under examination is free of materialmisstatement.Based on the above, we report that in our opinion and according to the information and explanations given to us,we have found the same to be correct and the same have been accordingly used in the Restated SummaryStatements appropriately.F-1

We further report that :1 The Restated Summary Statements have been made after making such adjustments and regroupings asin our opinion are appropriate and are subject to the notes to accounts attached to and forming part of theRestated Summary Statements as Annexure-IV of this report.2 The impact of changes in accounting policies adopted by the Company as at the end of nine monthsended December 31, 2009 have been adjusted with retrospective effect in the attached Restated SummaryStatements.3 The Restated Summary Statements of the Company have been prepared after incorporating adjustmentsfor the material amounts in the respective financial years to which they relate.4 There are no qualifications in the auditor’s reports which remain to be adjusted in the restated summarystatements, except the comments/ qualifications mentioned in Annexure-IV-E, which is to be read withSignificant Accounting Policies and Significant Notes to Accounts.5 There are no extra-ordinary items in any of the financial statements that need to be disclosed separatelyin the Restated Summary Statements.B. Other Financial Information:We have also examined the following other financial information relating to the Company, prepared by theManagement and approved by the Board of Directors for the purpose of inclusion herein :a) Statement of Sundry Debtors (Annexure-V)b) Statement of Loans and Advances Given (Annexure-VI)c) Statement of Accounting Ratios (Annexure-VII)d) Statement of Capitalization (Annexure-VIII)e) Statement of Changes in Share Capital (Annexure- IX)f) Statement of Other Income (Annexure-X)g) Statement of Dividend Declared (Annexure-XI)h) Statement of Tax Shelters(Annexure-XII)i) Statement of Secured Loans (Annexure-XIII)j) Statement of Unsecured Loans (Annexure-XIV)k) Statement of Related Party Transactions (Annexure-XV).l) Statement of Reserves & Surplus (Annexure-XVI)In respect of the years ended March 31, 2005 to March 31, 2009, these information have been included basedupon the reports submitted by previous auditors, for respective years and relied upon by us.In our opinion, the financial information and other financial information of the Company as attached to thisreport, as mentioned in paragraphs (A) and (B) above, read with significant accounting policies and notes toaccounts (Annexure – IV), and after making such adjustments as were considered appropriate, have beenprepared in accordance with paragraph B(1), Part II of Schedule II of the Act and the SEBI-ICDR Regulations,as amended from time to time. Our work has been carried out in accordance with the auditing standardsgenerally accepted in India and as per the Guidance Note on Reports in Company Prospectuses (Revised) issuedby the ICAI.This report should not in any way be construed as a reissuance or redating of the previous audit report by theother firms of Chartered Accountants nor should this be construed as a new opinion on any of the financialstatements referred to herein.We did not perform audit tests for the purposes of expressing an opinion on individual balances or summaries ofselected transactions, and accordingly, we express no such opinion thereon.We have no responsibility to update our report for events and circumstances occurring after the date of thereport.F-2

This report is intended solely for your information and for inclusion in the offer documents in connection withthe proposed public offering of equity shares of the Company and is not to be used, referred to or distributed forany other purpose without our prior written consent.For Hingorani M & Co.Chartered Accountants(Pradeep Kumar)PartnerMembership No.: 085630Firm Registration No: 006772NPlace: New DelhiDate: April 13, 2010F-3

Annexure IRESTATED STATEMENT OF ASSETS AND LIABILITIES(Rs. million)ParticularsAs at DecAs at March 31,31, 2009 2009 2008 2007 2006 2005A. FIXED ASSETSGross Block 86,229.3 85,725.2 83,998.1 81,370.9 79,414.6 79,653.4Less: Depreciation 15,472.2 12,183.6 10,340.8 7,883.3 5,425.7 3,605.6Net Block 70,757.1 73,541.6 73,657.3 73,487.6 73,988.9 76,047.8Capital Works In Progress 7,361.7 5,636.4 2,554.0 1,529.2 944.0 560.3Advances for Capital Works 1,922.3 1,559.9 615.5 173.5 307.6 245.3Construction Stores and Spares 6.1 6.3 6.6 135.8 19.6 7.9Net Block (including capital work in progress) 80,047.2 80,744.2 76,833.4 75,326.1 75,260.1 76,861.3B. INVESTMENTS - - - - - -C. DEFFERED TAX ASSET (NET)Deferred Tax Asset 3,012.4 2,663.6 (22.3) 1,798.3 1,151.8 616.5Less: Payable to Beneficiaries 3,012.4 2,663.6 (22.3) 1,798.3 1,151.8 616.5- - - - - - -D. CURRENT ASSETS, LOANS & ADVANCESInventories 611.5 558.5 536.3 587.1 625.5 337.2Sundry Debtors 2,660.4 3,645.5 3,169.6 2,508.3 7,578.9 3,332.2Cash and Bank Balances 14,871.5 12,714.4 6,936.0 6,210.4 1,333.5 3,427.7Other Current Assets 401.8 825.7 335.5 228.8 33.8 32.5Loans and Advances 6,210.5 4,624.6 6,633.8 5,605.2 4,346.7 2,224.524,755.7 22,368.7 17,611.2 15,139.8 13,918.4 9,354.1E. LIABILITIES AND PROVISIONSSecured Loans 11,305.1 13,075.1 17,109.3 21,868.3 26,828.4 31,371.5Unsecured Loans 6,393.7 8,349.3 3,091.5 3,373.7 3,998.9 4,945.5Income Received in Advance (AAD) 8,493.5 8,493.5 6,491.1 4,488.7 2,526.6 538.7Current Liabilities 4,118.9 4,995.3 5,447.1 3,386.2 3,356.2 2,718.8Provisions 6,741.5 7,434.2 5,389.5 4,747.4 3,637.0 1,845.837,052.7 42,347.4 37,528.5 37,864.3 40,347.1 41,420.3F. SHARE APPLICATION MONEY 167.0 - - - - -NET WORTH ( A+B+C+D-E-F ) 67,583.2 60,765.5 56,916.1 52,601.6 48,831.4 44,795.1G. SHARE CAPITAL 41,088.1 41,088.1 41,088.1 41,088.1 41,088.1 41,088.1H. RESERVES & SURPLUS 26,495.1 19,677.4 15,828.0 11,513.5 7,743.3 3,707.0NET WORTH ( G+H ) 67,583.2 60,765.5 56,916.1 52,601.6 48,831.4 44,795.1Notes:There are no Revaluations Reserves/revaluations carried, so no adjustments are required.The accompanying accounting policies & notes on accounts are an integral part of these statements.F-4

ParticularsRESTATED STATEMENT OF PROFITS & LOSSESFor the ninemonths endedDec 31, 2009Annexure II(Rs. million)For the Year Ended 31 st March2009 2008 2007 2006 2005INCOMESales (Net)* 14,231.0 14,907.8 13,567.5 14,094.6 10,623.6 12,775.0Other Income 869.0 1,440.6 1,055.3 667.1 2,885.8 674.2Total 15,100.0 16,348.4 14,622.8 14,761.7 13,509.4 13,449.2EXPENDITUREGeneration , Administration and Other Expenses 1,099.1 1,775.1 1,498.7 1,383.3 1,248.2 1,049.2Depreciation 3,259.9 2,342.3 2,399.2 2,456.1 2,325.6 2,182.8Interest and Finance Charges 1,396.2 2,205.5 2,546.9 3,229.8 3,415.3 4,075.4Total 5,755.2 6,322.9 6,444.8 7,069.2 6,989.1 7,307.4PROFIT BEFORE TAX 9,344.8 10,025.5 8,178.0 7,692.5 6,520.3 6,141.8Provision for TaxationIncome Tax- Current Tax 1,591.1 2,425.5 1,002.4 1,185.5 659.4 242.3Fringe Benefit Tax- Current Year - 6.7 6.4 7.1 6.5 -Wealth Tax - 0.1 0.1 0.1 0.1 -1,591.1 2,432.3 1,008.9 1,192.7 666.0 242.3Deferred Tax 348.9 2,685.9 1,820.6 646.4 535.3 616.5Less: Recoverable/Payable 348.9 2,685.9 1,820.6 646.4 535.3 616.5- - - - - -Total Provision for Taxation 1,591.1 2,432.3 1,008.9 1,192.7 666.0 242.3PROFIT AFTER TAX 7,753.7 7,593.2 7,169.1 6,499.8 5,854.3 5,899.5Balance brought forward from last Year 19,677.4 15,828.0 11,513.5 7,743.3 3,707.0 (562.9)Total available for Appropriation 27,431.1 23,421.2 18,682.6 14,243.1 9,561.3 5,336.6APPROPRIATIONSDividend- Interim 800.0 1,100.0 1,360.0 666.7 - 341.4- Proposed - 2,100.0 1,080.0 1,683.3 1,594.3 1,090.2Total Dividend 800.0 3,200.0 2,440.0 2,350.0 1,594.3 1,431.6Corporate Tax on Dividend- Interim 136.0 186.9 231.1 93.5 - 45.1- Proposed - 356.9 183.5 286.1 223.7 152.9Total Tax on Dividend 136.0 543.8 414.6 379.6 223.7 198.0BALANCE CARRIED TO BALANCE SHEET 26,495.1 19,677.4 15,828.0 11,513.5 7,743.3 3,707.0* Tariff Adjustment and Advance Against Depreciation has been netted from Sales.The Accompanying Accounting Policies and notes on accounts are an integral part of these statements.There are no Extra Ordinary items.F-5

Annexure IIIRESTATED STATEMENT OF CASH FLOWS(Rs. million)As at 31 stAs at March 31,Dec 2009 2009 2008 2007 2006 2005A. CASH FLOW FROM OPERATING ACTIVITIESNet Profit Before Tax, Prior Period Adjustments 9,344.8 10,025.5 8,178.0 7,692.5 6,520.3 6,141.8and Extra Ordinary ItemsAdjustment for:Advance Against Depreciation - 2,002.4 2,002.4 1,962.1 1,987.9 538.7Depreciation 3,259.9 2,342.3 2,399.2 2,456.1 2,325.6 2,182.8Interest & Finance Charges 1,396.2 2,205.5 2,546.9 3,229.8 3,415.3 4,075.4Exchange rate variation/Fluctuation Adjustment account - (97.1) (118.1) 52.0 (52.7) 235.0Rebate to Customers (177.7) (168.9) (213.6) (289.3) (162.9) (198.4)Debt/Stores written off - - - 0.1 0.3 -Loss on Sale of Assets - - - 0.4 0.3 -Operating Profit before Working Capital Changes 13,823.2 16,309.7 14,794.8 15,103.7 14,034.1 12,975.3Adjustment for:Trade and Other Receivables 985.0 (475.9) (661.3) 5,070.6 (4,246.7) (3,212.7)Inventories (53.0) (22.2) 50.8 38.4 (288.3) 564.1Trade Payables and Other Liabilities (876.4) (451.8) 2,060.9 30.0 637.4 (239.9)Provisions 173.0 91.8 1,632.7 892.6 1,855.6 286.4Loans and Advances (136.2) 2,994.9 (108.7) (1,258.5) (2,122.2) (1,229.5)Other Current Assets 423.9 (490.2) (106.7) (195.0) (1.3) 31.120.1 1,646.6 2,867.7 4,578.1 (4,165.5) (3,800.5)Cash generated from operations 14,339.5 17,956.3 17,662.5 19,681.8 9,868.6 9,174.8Taxes paid (1,449.7) (2,664.6) (1,203.9) (934.3) (453.9) (254.2)Net cash flow from Operating Activities-A 12,889.8 15,291.7 16,458.6 18,747.5 9,414.7 8,920.6B. CASH FLOW FROM INVESTING ACTIVITIESNet Expenditure on Fixed Assets & CWIP, Advance forCapital Works & Construction Stores/Spares etc.(2,562.7) (6,247.0) (4,602.4) (2,560.8) (1,523.7) (882.4)Net cash used in Investing Activities – B (2,562.7) (6,247.0) (4,602.4) (2,560.8) (1,523.7) (882.4)C. CASH FLOW FROM FINANCING ACTIVITIESShare Capital including share application moneypending allotment167.0 - - - - 633.0Repayment of Long Term Borrowings (5,110.0) (4,752.4) (5,735.6) (5,791.2) (5,489.7) (2,481.2)Interest & Finance Charges Paid (1,218.5) (1,939.5) (2,215.2) (2,940.5) (3,252.4) (3,877.0)Proceeds from Borrowings 1,384.4 5,976.0 380.7 - - 675.1Dividend (2,900.0) (2,180.0) (3,043.3) (2,261.0) (1,090.2) (341.4)Tax on Dividend (492.9) (370.4) (517.2) (317.1) (152.9) (45.2)Net Cash flow from Financing Activities – C (8,170.0) (3,266.3) (11,130.6) (11,309.8) (9,985.2) (5,436.7)Net Increase/Decrease in Cash and Cash equivalents(A+B+C)2,157.1 5,778.4 725.6 4,876.9 (2,094.2) 2,601.5Cash and cash equivalents (Opening balance) 12,714.4 6,936.0 6,210.4 1,333.5 3,427.7 826.2Cash and cash equivalents (Closing balance) 14,871.5 12,714.4 6,936.0 6,210.4 1,333.5 3,427.7Notes:4. Cash and cash equivalents consist of cash in hand and bank balances.5. The Previous year’s figures have been regrouped/re-arranged/re-casted wherever necessary.The Accompanying Accounting Policies and notes on accounts are an integral part of these statements.F-6

SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS, AS RESTATED:A. Significant accounting policies:1. SYSTEM OF ACCOUNTINGAnnexure IV1.1 The financial statements are prepared according to the historical cost convention on accrualbasis and in line with the fundamental accounting principles of prudence, consistency andmateriality except when otherwise stated.1.2 All figures are in Rupees million except otherwise stated and have been rounded off to the firstdecimal.2. STATEMENT OF COMPLIANCEThe financial statements are prepared on the basis of generally accepted accounting principles in Indiaand the provisions of The Companies Act, 1956.3. FIXED ASSETS3.1 Fixed Assets are stated at historical cost less accumulated depreciation and any impairment invalue. Where final settlement of bills with contractors is pending/under dispute, capitalizationis done on estimated/provisional basis subject to necessary adjustment in the year of finalsettlement.3.2 Fixed Assets created on land not belonging to the Company are included under Fixed Assets.3.3 Capital expenditure on assets not owned by the Company is reflected as a distinct item inCapital Work-in-Progress / Fixed Assets.3.4 Payments made provisionally towards compensation and other expenses relatable to land aretreated as cost of land.3.5 Expenditure incurred for compensatory afforestation, soil conservation and re-forestationtowards forest land is shown as “Intangible Assets-Expenditure on compensatoryafforestation” and is amortized pro-rata through depreciation over the period of likely use.3.6 Assets and systems common to more than one generating unit are capitalized on the basis ofengineering estimates/assessments.3.7 Construction equipments declared surplus are shown at lower of book value and net realisablevalue.4. MACHINERY SPARES4.1 Machinery spares procured along with the Plant & Machinery or subsequently and whose useis expected to be irregular are capitalized and depreciated fully over the residual useful life ofthe related plant and machinery except as stated as para 4.2.4.2 Cost / WDV of Machinery Spares are fully charged to revenue in the year in which suchspares are replaced except in cases where retrieved spares have useful life after repairs.4.3 Other spares forming part of inventory are expensed when consumed.5. CAPITAL WORK-IN-PROGRESS5.1 In respect of supply-cum-erection contracts, the value of supplies received at site/constructionstore and accepted is treated as Capital Work-in-Progress.F-7

5.2 Administration and Other General Overhead expenses at the Corporate Office and Projectsunder Construction / Survey & Investigation attributable to construction of fixed assets areidentified and allocated on systematic basis on major immovable assets other than land,infrastructure and bought out items on commissioning of Projects. However, noallocation of such expenses pertaining to Corporate Office is made on projects taken onBOOT (Build, Own, Operate & Transfer) basis till the date of grant of generation license.5.3 Expenditure on Survey and Investigation of the Projects is carried as capital work in progressand capitalized as cost of Project on completion of construction of the Project or the same isexpensed in the year in which it is decided to abandon such project.5.4 Expenditure against “Deposit Works” is accounted for on the basis of statement of accountreceived from the concerned agency and acceptance by the Company. However, the provisionis made wherever considered necessary.5.5 Claims for price variation /exchange rate variation in case of contracts are accounted for onacceptance.6. DEPRECIATION AND AMORTISATION6.1 Depreciation is charged on straight-line method to the extent of 90% of the Cost of Assetfollowing the rates notified by the Central Electricity Regulatory Commission (CERC) for thepurpose of fixation of tariff. In respect of assets, where rate has not been notified byregulations by the CERC, depreciation is provided on straight line method at the ratescorresponding to the rates laid down under the Income Tax Act, 1961, except in case ofcomputers and peripherals where it is depreciated at 25% p.a.6.2 Depreciation is provided on pro rata basis from the month in which the asset becomesavailable for use.6.3 Depreciation on assets declared surplus/obsolete is provided till the end of the month in whichsuch declaration is made.6.4 Assets costing Rs. 5000/- or less are depreciated fully in the year of procurement.6.5 Expenditure on software is recognized as ‘Intangible Asset’ and amortized fully over fouryears.6.6 Where the cost of depreciable assets has undergone a change during the year due toincrease/decrease in long term liability on account of exchange fluctuation, change in duties orsimilar factors, the revised unamortized balance of such assets is depreciated prospectivelyover the residual life. Depreciation on increase/decrease in the value of existing assets onaccount of settlement of disputes is charged retrospectively.6.7 Capital Expenditure referred to in Policy No. 3.3 is amortized over a period of four yearsstarting from the year in which the first unit of the project comes into commercial operationand thereafter from the year in which the relevant asset becomes available for use. However,such expenditure for community development in case of projects under operation is chargedoff to revenue.6.8 Leasehold land is amortized pro-rata through depreciation over the period of lease.6.9 Expenditure on Catchment Area Treatment (CAT) Plan during construction is capitalizedalong with dam. Such expenditure during O&M stage is charged to revenue in the year ofincurrence of such expenditure.7. INVESTMENTS7.1 Long Term Investments are valued at cost less provision for permanent diminution in value.F-8

7.2 Current Investments are valued at lower of cost and fair value.8. INVENTORIES8.1 Inventories are valued at the lower of cost arrived at on weighted average basis and netrealizable value.8.2 Loose tools issued during the year are charged to consumption.8.3 Stores issued for operation and maintenance but lying unused at site are treated as part ofinventory.9. FOREIGN CURRENCY TRANSACTIONS9.1 Foreign currency transactions are initially recorded at the rates of exchange ruling at the dateof transaction. Monetary items denominated in foreign currency are restated at the year end atexchange rates prevailing on the Balance Sheet date.9.2 Exchange differences, except to the extent considered as adjustment to borrowing cost as perAS-16 read with ASI-10, are recognized as income or expense in the period in which theyarise in case of operating projects and to EDC in case of projects under construction. However,the differences relating to Fixed Assets/Capital Works-in-Progress arising out of transactionsentered into prior to 01.04.2004 over & above those considered as borrowing cost areadjusted to the carrying cost of Fixed Assets/Capital Work-in-Progress.10. BORROWING COSTS11. INCOMEBorrowing costs attributable to fixed assets during construction /renovation and modernizationare capitalized. Other borrowing costs are recognized as an expense in the period in whichthey are incurred.11.1 Sale of energy is accounted for based on tariff approved by the Central Electricity RegulatoryCommission (CERC). Recovery/refund towards foreign currency variation in respect offoreign currency loans and recovery towards income tax from beneficiaries as per CERCnotification is accounted for on year to year basis.11.2 The incentives/disincentives are accounted for based on the norms notified/approved by theCentral Electricity Regulatory Commission.11.3 Advance against depreciation, forming part of tariff to facilitate repayment of loans, is reducedfrom sales and considered as deferred revenue to be included in the sales in subsequent years.11.4 The surcharge on late payment/overdue sundry debtors for sale of energy is accounted for onreceipt basis or when there is reasonable certainty of realisation.11.5 Interest recoverable on advances to contractors/suppliers and other claims fromcontractors/suppliers under dispute are accounted for on receipt/acceptance.11.6 Income from consultancy services is accounted for on the basis of actual progress / technicalassessment of work executed or costs reimbursable, in line with the terms of respectiveconsultancy contracts.12. EMPLOYEE BENEFITSProvision for gratuity, leave encashment, leave travel concession and post retirement benefits is madeon the basis of actuarial valuation at the end of financial year. Provident fund liability is accounted foron accrual basis.F-9

13. MISCELLANEOUS13.1 Insurance claims are accounted for in the year of receipt /acceptance by the insurer / certaintyof realisation.13.2 Prepaid and prior period expenses/income of items of Rs. 50,000/- and below are charged tonatural heads of accounts in the year of payment/receipt.13.3 Liability for claims against the Company is recognized on acceptance by the Company /receipt of award by the Arbitrator and the balance claim, if disputed /contested by thecontractor is shown as contingent liability. The claims prior to Arbitration award stage aredisclosed as contingent liability.14. TAXES ON INCOMETaxes on income are determined on the basis of taxable income under the Income Tax Act, 1961.Income Tax is a pass-through to beneficiaries to the extent relatable to core activity i.e. Generation ofelectricity.Deferred tax is recognized using the tax rates and laws enacted or substantively enacted as on thebalance sheet date.B. Major changes in accounting policies during the years ended March 31, 2005 to March 31, 2009and nine months ended December 31, 2009:1. Year ended March 31, 2005(a)Miscellaneous expenses (excluding expenditure incurred in connection with catchment areatreatment plans) would be written off in the year such expense was incurred, in accordancewith Accounting Standard (“AS”) 26 on “Intangible Assets.” Previously, such expenses wereamortised over a period of four years commencing in the year in which such expense wasincurred.2. Year ended March 31, 2006(a)(b)(c)Expenditure on software would be amortized on a straight-line basis at 25% over a four yearperiod commencing from the year in which such expenses were accreted/capitalized asintangible assets, in accordance with AS-26 on “Intangible Assets.” Previously, suchexpenditures were depreciated on a straight-line basis at 16.21% per annum.Corporate office expenses (excluding expenses relating to the commercial and systemsoperation department, which is an operating unit) are charged to the profit and loss accountand capitalized on the following basis: (i) an amount equivalent to 1% of energy sales foroperational projects for the financial year would be expensed to the profit and loss accountand (ii) all remaining amounts would be capitalized as capital work in progress (“CWIP”) andallocated to CWIP for the respective projects under construction based on the proportion ofcapitalized expenses of each such project to aggregate CWIP. Previously, these wereexpensed and capitalized on a proportional basis calculated as the ratio of aggregate energysales to annual capital outlayMachinery spares would be fully depreciated over the useful life of the assets to which suchmachinery spares related. Previously, only 95% of the value of machinery spares would bedepreciated over the relevant period.3. Year ended March 31, 2007F-10

(a)(b)Liability against contractor claims would be provided for upon either acceptance by theCompany of the claim (or part thereof) or upon receipt of a binding arbitration award.Previously, liabilities against contractor claims were provided for only upon acceptance by theCompany of the claim (or part thereof).Machinery spares would be fully depreciated in the year of issue or consumption. Previously,such machinery spares were depreciated over the useful life of the assets to which suchmachinery spares related.4. Year ended March 31, 2008(a)(b)(c)(d)(e)(f)(g)Expenditures relating to compensatory afforestation, soil conservation and otherenvironmental management activities relating to forest land would be capitalized as intangibleassets – expenditure on compensatory afforestation. Previously, such expenditures werecapitalized against “leasehold land.”Provision for expenses against advances for ‘deposit works’ made to state and regulatorybodies in connection with such works, would be made wherever considered necessary by theCompany. Previously, such provision was made on receipt of the relevant statement ofaccount from such state and regulatory bodies and acceptance by the Company.Depreciation has been charged following the rates notified by the Central ElectricityRegulatory Commission (CERC) for the purpose of fixation of tariff/at the rates laid downunder the Income-Tax Act, 1961/specified rate as against at the rates specified in Schedule-XIV of the Companies Act, 1956 retrospectively, in case of NJHPS from the date ofcommercial operations and for construction/investigation projects since inception.Expenditure relating to the catchment area treatment (CAT) plan during the operation of aproject would be charged to revenue in the year of incurrence of the expenditure as againsttreating the same as deferred revenue and amortization over a period of four yearscommencing from the year in which the expenditure was incurred.Foreign exchange rate variations would be adjusted based on the borrowing cost for fixedassets as against adjustments to the carrying cost of such assets, in accordance with AS-11“The Effects of Changes in Foreign Exchange Rate” and AS-16 “Borrowing Costs”, as readwith ASI-10 relating to interpretation of AS-16 and the notification issued by the Departmentof Company Affairs to the effect that AS-11 will prevail over Schedule-VI.Provision against leave travel concession/post retirement benefit would be made on the basisof actuarial valuation at the end of the year as against charging the expenditure on availing thefacility.Limits for pre-paid and prior period expenses/income being charged to corresponding lineitems in the year of payment/receipt has been revised from Rs. 5,000/- to Rs. 50,000/-.5. Year ended March 31, 2009(a)(b)To recognize Machinery Spares retrieved, which are suitable for reuse, and depreciate thesame over the useful remaining life of asset. Earlier, such Machinery Spares were notrecognized as reusable.To identify Administration and Other General overhead expenses at the Corporate Officeattributable to construction of fixed assets of Projects under Construction/Survey &Investigation stage, and allocate these on systematic basis (in ratio of salaries) to variousprojects, as against allocating common Corporate office expenses on basis of: 1% of Sales foroperational projects charged to revenue and remaining charged to Capital Work in Progress.F-11

C. Impact of changes in the accounting policies, material adjustments, prior period items and extraordinary items:S.N.ParticularsProfit after tax as per audited statements ofaccountsFor ninemonthsended Dec.31, 2009For the Year Ended March 312009 2008 2007 2006 20057771.4 10,153.2 7,645.1 7,327.1 4,982.1 2,984.3Adjustment on account ofA Change in the Accounting Policies/MethodsAllocation of Administrative and other generalexpenditure of Corporate office- - (106.5) (6.5) (1.7) 59.1Capital Spares (17.1) (9.8) 81.9 530.6 (134.2) (121.5)CAT Plan - 21.9 16.7 (9.6) 8.7 1.3Prior Period/ Prepaid Expenses - - 0.2 - (0.1) (0.1)Depreciation Rate (CERC vs Companies Act) - - (5,069.3) 1,569.7 1,469.9 1,409.4Total (17.1) 12.1 (5,077.0) 2,084.2 1,342.6 1,348.2B Material AdjustmentsSales - (2,144.9) 1,172.9 (73.0) (1,130.5) 2,542.5Insurance claim for loss of profit - - (2,366.8) - 2,366.8 -Insurance claim for damage (1.9) - (228.1) 210.0 20.0 -Advance against Depreciation - (556.9) (108.8) 320.0 307.0 38.7Interest on Arbitration - 370.9 377.4 (260.8) (260.8) (226.5)Interest to Beneficiaries - 557.9 (42.5) (211.8) (20.7) (282.9)Interest from Beneficiaries - (1,065.3) 103.4 194.9 318.6 448.4Total (1.9) (2,838.3) (1,092.5) 179.3 1,600.4 2,520.2C Prior Period Adjustment 1.3 (7.3) 5,505.2 (2,783.7) (1,813.3) (1,056.0)D Income Tax Relating to Earlier Years - 273.5 188.3 (261.7) (212.0) 11.9E Qualification of Statutory AuditorsRestructuring premium of PFC loan - - - (45.4) (45.5) 90.9F Total ( Impact of Adjustments) (17.7) (2,560.0) (476.0) (827.3) 872.2 2,915.2Adjusted Profit After Tax 7,753.7 7,593.2 7,169.1 6,499.8 5,854.3 5,899.5D. Notes on adjustments carried out:1. Prior Period ItemsCertain items of income/expenses have been identified as prior period items, which have been shown asadjustments in respective years to which these pertain. In the Restated Financials, such prior perioditems have been adjusted in respective years. Similarly, Income Tax relating to earlier years in Profit &Loss account has been reallocated to respective years.2. Accounting of Insurance ClaimsThe company filed a claim with the insurance company for loss of profit due to flash floods during theyear 2005-06. As per the accounting policy, the claim amount of Rs.2,366.8 million was accounted forduring the year 2007-08, on acceptance by the insurers. For the purpose of restatement, the insuranceclaim has been appropriately accounted for in the respective year of loss. Similarly, the claim fordamage to plant & machinery/other works has also been accounted for in the year the expenditure onrestoration for damages to plant & machinery/other works has been incurred.3. Final Tariff Order for Sale of EnergyDuring the year 2008-09, final tariff order for the period 2004-05 to 2008-09 was received, as a resultof which an amount of Rs. 1173.4 million (net) was billed as arrears for the period upto 31.03.2008 andincluded in Sales. For the purpose of restatement, the arrears billing has been accounted for as sales forF-12

espective years. Similarly, the interest receivable & payable on arrears has also been accounted for inthe respective years.4. Tax on Advance Against DepreciationDuring the year 2008-09, the company paid/provided Current Tax (MAT) on Advance AgainstDepreciation (AAD) amount of Rs. 8493.5 million based on the ruling of the Authority for AdvanceRulings (AAR), Ministry of Finance, Govt. of India, treating the same as Reserves. Though the AAD isnot part of income and is shown in Balance Sheet as Liability under ‘Income Received in Advance’, thetax amount has been billed and recovered from the beneficiaries as part of tariff in accordance withCERC Regulations.5. The company adopted Accounting Standard-15 (Revised) ‘Employee Benefits’ from the year 2007-08.For the purpose of restatement, AS-15 (Revised) has not been applied for the years 2004-05 to 2006-07, as AS-15 (Revised) requires prospective adjustments only.6. Changes in Accounting Policiesi. The Accounting policy with regard to machinery spares retrieved and suitable for reuse hasbeen modified in line with the opinion of expertly advisory committee of ICAI in year 2008-09 to fully charge the Cost / WDV of machinery spares to revenue in the year in which suchspares are replaced except in cases where retrieved spares have useful life after repairs. For thepurpose of restatement, effect of the same is taken in years 2007-08, 2006-07, 2005-06 and2004-05.ii.iii.Due to change in accounting policy for allocation of administration and other generaloverhead expenses in 2008-09, the allocation for years 2007-08, 2006-07, 2005-06 and 2004-05 has been changed accordingly.(a) During the year 2007-08, the company changed its accounting policy for charging therates of depreciation as per the rates notified by the CERC for the purpose of fixation oftariff/at the rates laid down under the Income Tax Ac, 1961/specified rates as against therates specified in Schedule XIV of the Companies Act, 1956, retrospectively in case ofNJHPS from the date of commercial operations and for construction/investigationprojects since inception. For the purpose of restatement, the depreciation for earlier yearswritten back during the year 2007-08 has been appropriately adjusted from thedepreciation in the respective years.(b) Due to change in the rates of depreciation during the year 2007-08, the company workedout Advance Against Depreciation (AAD), forming part of Tariff to facilitate repaymentof loans, as per the CERC norms and reduced the same from sales. The adjustmentrelating to earlier years was carried out through Prior Period Adjustment Account. For thepurpose of restatement, the amount of AAD has been appropriately adjusted from thesales in the respective years.iv.During the year 2007-08, company changed its policy and started charging to revenue theexpenditure on Catchment Area Treatment (CAT) Plan during O&M stage in the year ofincurrence of such expenditure as against treating the same as deferred revenue andamortization over a period of four years commencing from the year in which the expenditurewas incurred. For the purpose of restatement, effect of the same is taken in years 2006-07,2005-06 and 2004-05.v. During the year 2006-07, company changed its policy to recognize liability against claims bythe contractors on acceptance by the Company/receipt of Arbitration award as against onacceptance by the Company earlier. For the purpose of restatement, effect of the same is takenin years 2005-06 and 2004-05.vi.During the year 2007-08, company changed its policy in line with AS-11, AS-16 read withASI-10 and Notification issued by the Department of Company Affairs that AS-11 will prevailover Schedule-VI. Accordingly, the Foreign Exchange Rate Variation was adjusted towardsborrowing cost as against adjustment to the carrying cost of Fixed Assets earlier. . For thepurpose of restatement, effect of the same is taken in years 2006-07, 2005-06 and 2004-05.F-13

vii.viii.ix.During the year 2005-06, due to Accounting Standard (AS)-26 on ‘Intangible Assets’ theCompany recognized software as Intangible Assets by amortizing such assets over a period offour years as against earlier policy of charging depreciation @ 16.21%. For the purpose ofrestatement, effect of the same is taken in year 2004-05.During the year 2007-08, company changed its policy to revise the limit from Rs.5,000/- toRs. 50,000/- to recognize Prior period items and Prepaid expenses. For the purpose ofrestatement, effect of the same is taken in years 2005-06 and 2004-05.The other changes in Accounting Policies were either clarificatory in nature or have nomaterial impact on financial statements.x. The accounts for the year 2004-05 to 2008-09 and for the nine months ended December 31,2009 have been restated in accordance with the Guidance Note issued by the Institute ofChartered Accountants of India (“ICAI”) and other changes – adjustments referred above. Theeffect of changes for the financial years prior to 2004-05 has been adjusted in the Reserves &Surplus as at April 1,2004.F-14

E. Auditors Comments/Qualifications and Treatment in Restated Financials :Sr.No.1.Financial Yearended31.03.200931.03.200831.03.20072. 31.03.20073. 31.03.20064.31.03.200631.03.20055. 31.03.20056. 31.03.20057. 31.03.20058. 31.03.20059. 31.03.200510. 31.03.200511. 31.03.200512. 31.03.2005Auditors’ Comments / QualificationsDetermination of final value of fixed assets in caseswhere final settlement of bills with the contractors ispending/under dispute. The impact of adjustments is notascertainable.Provisional insurance claim of Rs.912.9 million againstexpenditure on restoration activity and adjustment ofon account payment of Rs.500.0 million received from theInsurance Company and allocation thereof between PriorPeriod and current year Generation and AdministrationExpensesi).Company has lodged a claim of Rs.941.0 million withInsurance Company for loss of machinery and restorationcost etc. On account payment of Rs.500.0 millionreceived from Insurance Company has been shown asliability in absence of item wise details of settlement ofclaimii).Company has also filed a claim for loss of profitamounting to Rs.3207.860 .million which is yet to beaccepted/admitted.The value of fixed assets and depreciation are subject toadjustment on final determination/recovery/Levy of LD inaccordance with Contract Agreement for works forproject construction.Total Project cost exceeded the approved revised cost(RCE-II) of the project Rs.76,663.1 million as at June,1998 price level with commissioning schedule of March,2002. Revised cost estimate (RCEIII) is reported to beunder approval by the Government.The land is capitalized on provisional basis pendingdetermination of final land value and consequentialadjustment thereof. Further, part of the land acquired andthe Title Deeds of the buildings are yet to betransferred/mutated/recorded in the name of the CompanyProvision has not been made for Assets declared surplus /obsolete valuing Rs.9.2 million as on the Balance Sheetdate.Besides, scrap has been accounted for on realization basis.In supply cum erection contracts, values of shipmentshave been accounted for on pro-rata basis on number ofboxes as material in transit and CWIP on the balanceSheet date.The liability, if any, arising on account of delay indeduction of Income Tax at source at the year endremains unadjusted pending final determination.Loans and Advances include Rs.29.5 million recoverableon account of proportionate cost of inter connectionfacility at Jhakri Pot head Yard which will be shared byBaspa-II HE Project (M/s. Jai Prakash Hydro Power Ltd.)for evacuation of power.Loans and Advances include Rs.16.1 million towardsamount recovered by Income Tax Department towardsTDS on deposit made with High Court HP, Shimla forcontesting the case of enhancement of compensation forland including interest. The Company is contesting therecovery with ITAT and High Court of HP, Shimla. TheCompany deducted TDS on subsequent deposits duringthe year, deposited the same with Income Tax Departmentand issued TDS Certificates in the name of joint claimantsinstead of individuals as required by the Income Tax Act,1961.Sundry debtors include Rs.184.0 million on account ofunrealised debtors towards sale of 12% free powerbelonging to Government of Himachal Pradesh. Due topendency of mutual formal agreement and commercialterms for sale of free power on their behalf, an amount ofRs.115.9 million realized has not been paid to them as atthe year end.Impact on restated financialsAs the final settlement amount cannot bedetermined, no adjustments have been made inthe restated financial statements.As the insurance claim has been settled in F.Y.2007-08, the adjustment of the amountreceived has been appropriately made in theyear the expenditure on restoration of damageshad been incurred.As the insurance claim has been settled in F.Y.2007-08, the adjustment of the amountreceived has been appropriately made in theyear the expenditure on restoration of damageshad been incurred.As and when, the contracts are finally closed,the amount of LD is determined and theadjustment is made in the accounts throughprior period items. All such prior period itemshave been adjusted in respective years.Confirmatory statement and hence norestatement is requiredCannot be quantified, hence no adjustmentshave been made in the restated financials.No restatement has been made as the dataregarding scrap value of such assets is notreadily available.Value of scrap sold is not material to effectrestatement.Values fully ascertained subsequently andnecessary accounting adjustments made.As the amount cannot be determined, noadjustment has been made in the restatedfinancial statements.Amount recovered subsequently and necessaryaccounting adjustments made. No restatementrequired.As the amount cannot be determined, noadjustment has been made in the restatedfinancial statements.Amounts adjusted subsequently and necessaryaccounting adjustments made. No restatementrequired.F-15

13. 31.03.200514.31.03.200931.03.200831.03.200731.03.200631.03.200515. 31.03.200916. 31.03.200917.18.19.31.03.200831.03.200731.03.200631.03.2005Nine monthsended 31.12.2009Nine monthsended 31.12.2009Advances for Capital works and Loans and Advancesinclude Rs.276.4 million towards EOT claim andRs.961.3 million towards others from contractors are onaccount of contractual disputes and is subject toconsequential adjustment on settlement of disputes.Although the Company has an Internal Audit departmentand also some of the areas got audited by a firm ofChartered Accountants, scope of work covered, reportingsystem, compliance thereof need to be furtherstrengthened. Subject to above the existing internal auditsystem is commensurate with its size and nature of itsbusiness.Undisputed statutory dues including Provident Fund, etc.have been generally deposited by the Company in timewith appropriate authorities except in the cases of:iii) petty contractors’ labour where P.F. Code has notbeen assigned by the appropriate authorities, andiv) R&D Cess tax liability of Rs.9.6 million.There are disputed amounts of:iii) Rs.0.1 million payable in respect of excise duty(dispute pending at CESTAT), andiv) Rs. 123.6 million in respect of Service Tax (disputepending with Commissioner, Excise & Service Tax,Chandigarh)The Company is regular is depositing undisputedstatutory dues including Provident Fund etc. withappropriate authorities except in the cases of pettycontractors’ labour where P.F. Code has not beenassigned by the appropriate authorities.There is a disputed amount of Rs. 0.1 million payable inrespect of excise duty payable to Department of Excise &Customs.Sales have been accounted for provisionally at the tariffapproved by CERC as applicable on 31.03.2009, insteadof as per the new norms notified by CERC applicablewith effect from. 01.04.2009, resulting in understatementof profit for nine months by Rs.413.4 Million.Sale/Lease Deeds in respect of Land & Buildings valuingRs.23.5 Million are yet to be executed in favour of thecompany.As and when, the disputes are settled, theamount of claims is determined and theadjustment is made in the accounts throughprior period items. All such prior period itemshave been adjusted in respective years.Strengthening of the internal audit system is acontinuous process. This is only a statementrequired under CARO and does not need anyrestatement.Now SJVN has got sub-code issued andcompliance is being made through sub-code inrespect of these contractors.Matter pending settlement. Hence norestatement required.Since these matters are under dispute,provision / payment will be made onsettlement. No restatement required.Now SJVN has got sub-code issued andcompliance is being made through sub-code inrespect of these contractors.As the matter is under dispute, provision /payment will be made on settlement. Hence,No restatement required.No restatement has been made as the saleshave been accounted for as per the AccountingPolicy No. 11.1 of the company. Thedifference will be accounted for after the finaldetermination of tariff by the CERC as per thenew norms.Factual statement and hence no restatement isrequired.F. Contingent liabilities (Rs. million)For nineFor the Year Ended March 31,Particularsmonths endedDec. 31, 2009 2009 2008 2007 2006 20051. Claims against the company not acknowledged as Debt:a) Capital Works 5429.7 3442.3 8841.4 12487.8 15494.0 15613.0b) Land Compensation 144.9 144.9 229.7 0.2 - -c) Disputed Service Tax Demand 123.6 123.6 - - - -d) Others 2.0 3.4 3.5 6.8 5.1 5.1Sub Total 5700.2 3714.2 9074.6 12494.8 15499.1 15618.12. Estimated amount of contracts remaining to be executed on 10941.8 12529.5 8735.5 8576.7 413.0 626.3capital account (net of adv.) and not provided for:Total 16642.0 16243.7 17810.1 21071.5 15912.1 16244.4G. Other significant notes on accounts as on December 31, 2009:1. As the generation of hydroelectric power is dependent on the flow of water which varies during variousperiods of the year, the results for nine months may not be representative of the full year results.2. The revised cost estimate (RCE –III) of Nathpa Jhakri Hydro Power Station (NJHPS) has beenapproved by the Govt. of India at Rs. 81877.1 million. This does not include the amount ofArbitration Awards / Court Awards settled subsequently and pending settlement. The proposal forF-16

further revision of the Cost Estimate shall be submitted to the Govt. after inclusion of the above in duecourse.3. Title deeds/ title in respect of land costing Rs. 22.0 million measuring 01-18-59 hectare and buildingscosting Rs. 1.5 million are yet to be executed / passed in favour of the Company. Expenses on stampduty etc. shall be accounted for on registration.Possession of land measuring 01-07-76 hectare is still to be handed over to the Company.4.a. As per the agreement between GoHP and the Company, Luhri Hydroelectric Project shall beexecuted by an SPV jointly owned by GoHP and the company. A proposal for execution ofthis project by the Company itself is under consideration. Pending decision on thismatter/formation of SPV, expenditure of Rs. 509.0 million incurred on survey andinvestigation of the project has been shown as fixed assets and capital work in progress.b. As per letter dated 01.10.2009, GoHP has withdrawn Khab Hydroelectric Project from thecompany which is being contested by the company. Pending final settlement of the matter, theexpenditure incurred on the project upto 31.12.2009 amounting to Rs. 126.4 million has beenshown in Capital Work in Progress.5. Central Electricity Regulatory Commission (CERC) vide notification dated 19.01.2009 has notified,the terms and conditions of tariff applicable with effect from 01.04.2009 for a period of five years.Pending filing of petition by the company and final determination of tariff by the CERC, the Companyhas accounted for sales of Rs.14,231.0 million for the current period at the tariff approved by CERC asapplicable on 31.03.2009, as provided in the aforesaid Notification.The tariff for the current period, if calculated as per the terms and conditions applicable with effectfrom 01.04.2009, provisionally works out to Rs.14644.4 million. The difference of Rs.413.4 millionwill be accounted for after the final determination of tariff by CERC.As per the Notification, Income Tax is no more a pass-through item. However, CERC has allowed toprovisionally bill the Income Tax to beneficiaries pending approval of the tariff as per new norms.Accordingly, Income Tax amounting to Rs.1443.5 million worked out on the basis of profit for the ninemonths ended 31.12.2009 has been included in sales, out of which an amount of Rs.1199.1 million hasalready been billed to beneficiaries and the remaining amount of Rs.244.4 million is yet to be billed.6. The aforesaid CERC notification also provides for the rates of depreciation for the tariff period 2009-14. The rates of depreciation as notified by CERC are to be used for the purpose of tariff as well asaccounting. There is no provision for AAD in the said Regulations. Depreciation charge for the currentnine months is higher by Rs. 1,599.5 million due to the revision of rates of depreciation from01.04.2009.7. Leave Salary/Pension Contribution in respect of employees on deputation has been paid /provided onthe basis of provisional demand received from the lending organizations. The difference, if any will beadjusted on receipt of final demand.8. Some claims of the contractors and counter claims of the Company are under various stages ofdispute/settlement. Although, the liability has been recognized in terms of Accounting Policy No. 13.3,there is no certainty about the amounts which may become finally payable to/receivable from thecontractors. In view of this uncertainty, deductions towards Income Tax shall be made on final settlementwith the contractors.9. Pending approval of the Competent Authority, provisional payments made towards executed quantities ofsome of the items beyond approved quantities as also for extra items, are included in Capital Works-inProgress.10. Some of the balances shown under advances, deposits, creditors, and materials in transit/materials lyingwith third parties are subject to confirmation, reconciliation and consequential adjustments, if any.11. In the opinion of the management, the value of current assets, loans and advances, on realization in theordinary course of business, will not be less than the value at which these are stated in the Balance Sheet.F-17

12. At the Annual General Meeting of the company, held on 10.09.2009, the shareholders approved:i) the sub-division of each fully paid-up equity share of Rs. 1000/- of the company into one hundred fullypaid-up equity shares of Rs. 10/- each, andii) change in the name of the company from ‘Satluj Jal Vidyut Nigam Limited’ to ‘SJVN Limited’.13. Provision for Employee benefits under AS-15 for the current period has been made on the basis ofActuarial valuation obtained for the financial year 2008-09.14. Segment reporting:As the Company is primarily engaged in only one segment viz. “Generation and sale of hydroelectricpower”, there are no reportable segments as per Accounting Standard 17.15. The Company’s significant leasing arrangements are in respect of operating leases of premises forresidential use of employees, offices, guesthouses & transit camps. These leasing arrangements, which arenot non-cancellable, are usually renewable by mutual consent on mutually agreeable terms. The Scheduleof Employees remuneration and benefits include Rs. 10.4 million towards lease payments, net ofrecoveries, in respect of premises for residential use of employee. Lease payments in respect of premisesfor offices, guest house & transit camps are shown as Rent / Hiring charges under Schedule of Generation,Administration and other expenses / Expenditure during Construction (EDC).16. Impairment of Assets - Accounting Standard (AS) - 28There is no indication of any significant impairment of assets during the current period.17. Pending implementation of Wage Revision of employees with effect from 01.01.2006/01.01.2007, aprovision of Rs. 134.1 million for the nine months ended 31.12.2009 inclusive of Performance Related Pay(PRP) has been made and included in employee cost.Similarly an amount of Rs. 79.7 million for nine months ended 31.12.2009 towards provision forretirement benefits has been made and included in the employee cost.18. All figures are in Rupees million except otherwise stated and have been rounded off to the first decimal.F-18

Annexure VDETAILS OF SUNDRY DEBTORSParticulars As at Dec 31, 2009(Rs. million)As at March 31,2009 2008 2007 2006 2005Unsecured (Considered good) :- Outstanding for period exceeding six months - - - 11.7 - 5.0- Others 2,660.4 3,645.5 3,169.6 2,496.6 7,578.9 3,327.2Total 2,660.4 3,645.5 3,169.6 2,508.3 7,578.9 3,332.2Note: There is no amount due from Promoters and Directors included in Sundry Debtors.F-19

ParticularsDETAILS OF LOANS AND ADVANCES GIVENFor the Ninemonthsended Dec31, 2009Annexure VI(Rs. million)For the Year Ended as at March 31,2009 2008 2007 2006 2005Loans to Employees- Secured 47.1 89.2 82.1 66.0 61.8 62.6- Unsecured( considered good) 63.6 20.3 10.7 9.1 13.8 8.3- Considered doubtful - - - - - -Advances recoverable in cash or in kind or for value to be receiveda) Contractors & Suppliers- Unsecured (considered good) 574.0 572.3 1,048.0 1,188.2 1,182.2 1,424.6- Considered doubtful 1.0 1.0 1.0 0.9 0.9 0.9Less: Provision for doubtful advances (1.0) (1.0) (1.0) (0.9) (0.9) (0.9)b) Govt. Depts. for Deposit Works 348.1 232.5 96.2 - - -Less: Provision for Expenditure (82.4) (82.8) (28.8) - - -c) Employees[including imprest unsecured](considered good) 24.3 13.7 13.8 11.1 11.3 10.6d) Others- Unsecured (considered good) 19.3 58.2 156.8 137.6 266.3 113.3- Considered doubtful 0.7 0.7 0.4 - - -Less: Provision for doubtful advances (0.7) (0.7) (0.4) - - -e) Recoverable from Insurance Company - - 2,574.4 2,366.8 2,366.8 -e) Security Deposit with:- Government Departments 27.1 8.4 8.6 8.7 8.7 5.9- Deposits for Works - - - 97.6 108.7 36.8- Others 0.7 0.6 0.6 0.5 0.4 0.4f) Prepaid Expenses 37.7 4.3 1.0 174.6 179.3 148.4g) Deferred Foreign Currency Fluctuation Assets 238.6 248.5 201.7 - - -h) Advance Tax and TDS 4,866.4 3,416.7 2,431.0 1,511.1 117.7 390.1i) Interest Accrued on Staff Advances:-- Secured 45.8 36.8 34.4 29.5 26.5 21.0- Unsecured (considered good) 0.2 5.9 3.3 4.4 3.2 2.5Total 6,210.5 4,624.6 6,633.8 5,605.2 4,346.7 2,224.5F-20

S.No.Key RatiosFor the Ninemonths ended Dec31, 2009ACCOUNTING RATIOSFor the Year Ended March 31Annexure VII(Rs. million)2009 2008 2007 2006 2005A. Earning Per Share (Rs.)*Basic 1.89 1.85 1.74 1.58 1.42 1.45Diluted 1.89 1.85 1.74 1.58 1.42 1.45B. Return on Net Worth (%) 11.47% 12.50% 12.60% 12.36% 11.99% 13.17%C. Net Assets Value per Share (Rs.) 16.45 14.79 13.85 12.80 11.88 10.90D. Total number of shares outstandingat the beginning of the year 4,108,814,000 4,108,814,000 4,108,814,000 4,108,814,000 4,108,814,000 4,025,514,000E. Total number of shares outstandingat the end of the year 4,108,814,000 4,108,814,000 4,108,814,000 4,108,814,000 4,108,814,000 4,108,814,000F. Weighted Average number of EquityShares used as denominatorBasic 4,108,896,510 4,108,814,000 4,108,814,000 4,108,814,000 4,108,814,000 4,077,074,822Diluted 4,108,896,510 4,108,814,000 4,108,814,000 4,108,814,000 4,108,814,000 4,077,074,822*Face value of Rs 10/-Notes:The Ratios have been computed as follows:Earnings Per Share (Rs.): Net Profit after TaxWeighted average number of equity Shares outstanding at the end of the yearReturn on Net Worth (%): Net Profit after TaxNet Worth Equity excluding revaluation reserve/ Capital Grant received against Fixed AssetsNet Asset Value per share (Rs): Net Worth Equity excluding revaluation reserve/Capital Grant received against Fixed AssetsNo. of Equity Shares outstanding at the end of the Year.F-21

Annexure VIIICAPITALISATION STATEMENT(Rs. million)Particulars Pre Issue as at Dec 31, 2009 Post Issue **Debt:a) Short-term Debt 235.1 235.1b) Long-term Debt 17,463.7 17,463.7Total Debt: 17,698.8 17,698.8Shareholders Fundsa) Equity Share Capital 41,088.1 41,366.2*b) Reserves & Surplus 26,495.1 26,626.4Total Shareholders Funds 67,583.2 67,992.6Less: Miscellaneous Exp. to the extent not written-off - -Net Worth 67,583.2 67,992.6Long-term Debt/Equity Ratio # 0.26 :1 0.26 :1*On April 13, 2010, the Company has allotted 27,812,500 equity shares of Rs. 10 each to GoHP at apremium of 4.72 on preferential basis, pursuant to the special resolution passed by members of theCompany in its extra ordinary general meeting held on Apr 13, 2010.** Since it is an offer for sale of Equity Shares by the Selling Shareholder, there will be no change inthe capitalisation subsequent to this Offer.# The Long Term Debt/Equity Ratio has been computed as under:Long Term Debt/Equity Ratio: Long term debt/Total shareholders fundsNotes1. Short Term Debt is considered as debt having original repayment term not exceeding 12months.2. Long Term Debt is considered as debt other than short term debt, as defined above.The figures disclosed above are based on the restated financial statements of the Company.F-22

3. Annexure IXSTATEMENT OF CHANGES IN SHARE CAPITAL(Rs. million)Particulars As at Dec 31, 2009As at March 31,2009 2008 2007 2006 2005Share CapitalAuthorised Share CapitalNo. of Equity Shares of Rs. 10 7,000 4,500 4,500 4,500 4,500 4,500each (In Million)Amount 70,000 45,000 45,000 45,000 45,000 45,000Issued, Subscribed & PaidUpNo. of Equity Shares (in 4,108.8 4,108.8 4,108.8 4,108.8 4,108.8 4,025.5Million) at the beginning ofthe yearAdd: Bonus Shares (in - - - - - -Million)Add: Fresh Issue of Equity - - - - - 83.3Shares (in Million)No. of Equity Shares at the 4,108.8 4,108.8 4,108.8 4,108.8 4,108.8 4,108.8end of the year (in Million)Amount 41,088.1 41,088.1 41,088.1 41,088.1 41,088.1 41,088.1* Face value of equity shares has been sub divided from Rs. 1000/- per share to Rs. 10/- per share duringthe Nine months ended Dec 31, 2009. Accordingly, face value of equity share and the number of shareshave been restated for earlier years.F-23

ParticularsFor theNine Monthended Dec31, 2009DETAILS OF OTHER INCOMEFor the Year Ended as at March 31,2009 2008 2007 2006 2005Annexure XNature(Recurring /NonRecurring)(Rs. million)Related/ NonRelated toBusinessConsultancy WorksReceipts - 8.4 15.8 - 2.1 2.5 Recurring RelatedLess: Expenditure - (2.8) (6.1) - (0.9) (1.2)Interest From:Banks 812.8 1,186.5 751.3 431.6 170.6 167.6 Recurring RelatedEmployees 5.0 6.5 5.4 5.2 5.2 4.9 Recurring RelatedContractors 0.3 0.1 0.4 0.1 - 0.1 Non Recurring RelatedInterest from Customers - 12.2 103.4 194.9 318.6 448.4 Non Recurring RelatedOthers 6.1 - - 4.8 4.6 9.7 Non Recurring RelatedInterest on Income TaxRefundLess: Refundable toCustomersSurcharge on Late Paymentfrom CustomersReceipt of Maintenance ofInter Connection Facility- 7.6 - - - - Non Recurring Related- (7.6) - - - - Non Recurring Related- 43.2 1.0 1.1 - - Recurring Related10.0 12.6 11.9 10.9 10.3 9.7 Recurring RelatedProfit on Sale of Fixed0.3Assets7.4 1.1 0.2 0.2 0.1 Non Recurring RelatedSale of Scrap 2.1 (1.4) 3.5 - - 0.2 Recurring RelatedMiscellaneous Income 12.3 47.2 23.9 18.3 8.3 32.2 Non Recurring RelatedClaim from Insurance-Company for loss of profit- - - 2,366.8 - Non Recurring RelatedForeign Currency20.1Fluctuation Adjustment120.7 143.7 - - - Non Recurring Related(Credit)Total 869.0 1,440.6 1,055.3 667.1 2,885.8 674.2% of Other Income toProfit before Tax9.3% 14.4% 12.9% 8.7% 44.3% 11.0%F-24

ParticularsFor the Ninemonthsended Dec31, 2009DETAILS OF DIVIDEND DECLAREDFor the Year Ended March 31Annexure XI(Rs. million)2009 2008 2007 2006 2005Equity Share CapitalFace Value (Rs.) * 10 10 10 10 10 10No. of Shares 4,108,814,000 4,108,814,000 4,108,814,000 4,108,814,000 4,108,814,000 4,108,814,000Rate of Dividend (%)Interim 1.95% 2.68% 3.31% 1.62% - 0.83%Final - 5.11% 2.63% 4.10% 3.88% 2.65%Amount of DividendInterim 800.0 1,100.0 1,360.0 666.7 - 341.4Final - 2,100.0 1,080.0 1,683.3 1,594.3 1,090.2Corporate Dividend Tax 136.0 543.8 414.6 379.6 223.7 198.0* Face value of equity shares has been sub divided from Rs. 1000/- per share to Rs. 10/- per share duringthe Nine months ended Dec 31, 2009. Accordingly, face value of equity share and the number of shareshave been restated for earlier years.F-25

ParticularsAnnexure XIISTATEMENT OF TAX SHELTERS(Rs. million)For the Year Ended as at March 31,2009 2008 2007 2006 2005Restated profit before Tax (A) 10,025.5 8,178.0 7,692.5 6,520.3 6,141.8Tax Rate (%) 33.99% 33.99% 33.66% 33.66% 36.59%Notional Tax on Restated Profits 3,407.7 2,779.7 2,589.3 2,194.7 2,247.3Adjustments :Permanent Differences :Tax on Lease Perquisites debited in P/L 1.0 - - - -Tax Holiday Claim u/s 80 IA (11,078.3) (5,566.4) (10,105.6) (6,592.2) (3,591.8)Expenses disallowed u/s 37 - 20.6 3.7 (20.6) (1.9)Prior Period Adjustments(net) - - - 179.2 -Deduction u/s 80G - - - - (5.3)Adjustment on Account of Restatement - - - - -Total Permanent Difference (B) (11,077.3) (5,545.8) (10,101.9) (6,433.6) (3,599.0)Timing Differences :Diff. between Book & Tax Depreciation (640.3) (321.2) 1,829.2 1,007.7 982.0Misc Expenditure (Diff in Tax & P&L) (0.8) (0.8) (0.8) (0.8) 5.4Retirement Benefits - Disallowed u/s 43B 43.2 9.1 26.3 2.3 -Expenses disallowed /s 40 (ia) 13.6 (0.3) 0.3 - -Interest on Income Tax refund 7.6 - - - -Interest from Bank taken in IEDC - - - 5.2 -Adjustment for brought forward Losses/unabsorbeddepreciation(utilized)/created - - - - (459.1)Adjustment on Account of Restatement 2,833.5 664.3 565.6 (1,084.2) (2,903.3)Total Timing Difference (C) 2,256.7 351.1 2,420.6 (69.9) (2,374.9)Net Adjustment (B+C) (8,820.6) (5,194.7) (7,681.3) (6,503.5) (5,973.9)Tax Shelter 2,998.1 1,765.7 2,585.5 2,189.1 2,185.9Taxable Income as per Income Tax Return 1,204.9 2,983.3 11.2 16.8 167.9(D=A+B+C)Tax as per Income Tax Return u/s 115 JB (MAT)Tax rate u/s 115 JB 11.33% 11.33% 11.22% 8.42% 7.84%Total Tax as per Return 2,424.6 1,002.4 929.1 470.7 240.8F-26

STATEMENT OF SECURED LOANSAnnexure XIII(Rs. million)Name of LenderLoanSanctionedOutstanding as atDec 31, 2009Rate of InterestPower Finance Corporation Ltd. ## 11,180.0 5,590 8.52%Power Finance Corporation Ltd. ## 3,200.0 1,600.0 10.66%REC Ltd. ## 4,569.0 2,141.7 9.00%LIC of India # 4,210.0 1,973.4 9.31%Total11,305.1Repayment TermsTen years tenure,repayable in 40 quarterlyinstalments with effectfrom 15-Jan-2005.Ten years tenure,repayable in 40 quarterlyinstalments, with effectfrom 15-Jan-2005.Eight years tenure,repayable in 32 quarterlyinstalments, with effectfrom 10-Oct-2005.Eight years tenure,repayable in 32 quarterlyinstalments, with effectfrom 1-Oct-2005.Note : All loans secured by equitable mortgage/hypothecation of all present & future fixed assets andbook debts of NJHPS as first charge ranking pari passu with charge already created subject to negativelien on the equipment financed under unsecured foreign currency loans.# The borrower shall not prepay the outstanding principal amount of the loan in full or in part , beforethe due dates except after obtaining the prior approval of the lender (which may be grantedconditionally)## The borrower shall not prepay the outstanding principal amount of the loan in full or in part , beforethe due dates except after conversion right is exercised in full, or has lapsed and after obtaining theprior approval of the lender (which may be granted conditionally)F-27

Annexure XIVSTATEMENT OF UNSECURED LOANSName of LenderGuaranteed by Govt. of IndiaLoanDrawnOutstandingas at Dec 31,2009Rate of InterestWorld bank (IBRD) 4752.6 4,780 LIBOR + variable spreadKreditanstalt fur Wiederaufbau, Germany 2386.5 148.0 6.64%Eksportfinans , Norway 1056.1 334.0 5.95%Eksportfinans , Norway 148.5 37.0 5.95%Nordic Investment Bank,Finland557.5 278.7 LIBOR+ 0.6%Banque Nationale De paris,France 1513.2 580.9 6.60%(Rs. million)Repayment TermsFifteen years tenure,repayable in 30 halfyearly instalments, witheffect from 15-May-2013.Twelve years tenure,repayable in 21 halfyearly instalments. witheffect from 31-Jan-2000Twelve years tenure,repayablein 24 half yearlyinstalments, with effectfrom 31-Jul.2000.Twelve years tenure,repayablein 24 half yearlyinstalments, with effectfrom 31-Jul.2000.Twelve & half yearstenure, repayable in 25half yearly instalments,w.e.f.28-Oct.2002.Ten years tenure,repayable in 20 half yearinstalments,with effect from 30-Sep-2002.Total 6,158.6Short term Rupee Loans from BanksHDFC Bank Ltd, New Delhi 427.6 235.1 4.90% Demand LoanTotal 235.1Total Unsecured Loans 6,393.7Note: There are no loans from Promoters and Directors included in Unsecured Loans.F-28

STATEMENT OF RELATED PARTY TRANSACTIONSI - Key management Personnel:Annexure XV2004-05I Sh. Y.N. Apparao Chairman & Managing DirectorII Sh. Tarun Kapoor Director (Personnel)III Sh. H.K Sharma Director (Civil)2005-06I Sh. Y.N. Apparao Chairman & Managing Director (Up to 31.05.2005)II Sh. H.K SharmaChairman & Managing Director (with effect from18.07.2005)III Sh. Tarun Kapoor Director (Personnel) (Upto 22.05.2005)IV Sh. M.S. Sharma Director (Finance) (Upto 01.12.2005)V Sh. R.D. Prabhakar Director (Electrical) (with effect from 30.11.2005)2006-07I Sh. H.K Sharma Chairman & Managing DirectorII Sh. Tarun Kapoor Director (Personnel) (Up to 22.05.2006)III Sh. R.S. Katoch Director (Personnel)( with effect from 25.09.2006)IV Sh. J.K. Sharma Director (Civil) (with effect from 14.06.2006)V Sh. K.K. Garg Director (Finance) (with effect from 07.05.2007)VI Sh. R.D. Prabhakar Director (Electrical)2007-08I Sh. H.K Sharma Chairman & Managing DirectorII Sh. R.S. Katoch Director (Personnel)III Sh. J.K. Sharma Director (Civil)IV Sh. K.K. Garg Director (Finance)V Sh. R.D. Prabhakar Director (Electrical) (Up to 31.10.2007)VI Sh. R.P. Singh Director (Electrical) (with effect from 01.11.2007)2008-09I Sh. H.K Sharma Chairman & Managing DirectorII Sh. R.S. Katoch Director (Personnel)III Sh. J.K. Sharma Director (Civil)IV Sh. K.K. Garg Director (Finance)V Sh. R.P. Singh Director (Electrical)Nine Months ended December 31, 2009I Sh. H.K Sharma Chairman & Managing DirectorII Sh. R.S. Katoch Director (Personnel)III Sh. J.K. Sharma Director (Civil) (Up to 09.04.2009)IV Sh. K.K. Garg Director (Finance) (Up to 03.11.2009)V Sh. R.P. Singh Director (Electrical)II - Remuneration to Key Management Personnel:(Rs. Million)For the nine monthsFor the Year Ended March 31,Particularsended Dec 31, 2009 2009 2008 2007 2006 2005Salaries & Allowances 5.30 6.40 5.00 2.30 2.03 1.60F-29

Contribution to Provident Fund & family pension fund 0.40 0.40 0.40 0.20 0.12 0.10Gratuity 0.50 0.60 0.10 0.10 0.60 0.20Other Benefits 0.50 0.40 0.50 0.50 0.58 0.70Note: Whole time Directors were also allowed the use of staff cars including for private journeys onpayment in accordance with stipulations of the Department of Public Enterprises.III - Amount of dues outstanding from Key Management Personnel:As at March 31,As at Dec 31, 2009Particulars2009 2008 2007 2006 2005Loan & Advances to Directors 0.20 6.40 5.00 2.30 2.03 1.60IV - Transactions with Key Management Personnel:ParticularsAssets Purchased/retained by Ex Directors/their depend-ants on their retirement/death under buy back schemeFor the Ninemonths endedDec 31 , 2009For the Year Ended March 31,2009 2008 2007 2006 2005- - 0.10 0.10 0.40 -F-30

Annexure XVISTATEMENT OF RESERVES AND SURPLUS(Rs. Million)As at DecAs at March 31,Particulars31, 2009 2009 2008 2007 2006 2005Reserves & SurplusProfit & Loss Account 26,495.1 19,677.4 15,828.0 11,513.5 7,743.3 3,707.0Total 26,495.1 19,677.4 15,828.0 11,513.5 7,743.3 3,707.0F-31

SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN INDIAN GAAP, U.S. GAAP ANDIFRSThe summarized financial information and financial statements included in this Red Herring Prospectushave been prepared in accordance with the requirements of the Companies Act and accounting principlesgenerally accepted in India which differ in certain respects from the accounting principles generallyaccepted in the United States and from the International Financial Reporting Standards (“IFRS”).The following table summarizes significant differences between Indian GAAP, U.S. GAAP and IFRS,insofar as they affect financial information reported in this Red Herring Prospectus. The summary belowshould not be construed to be exhaustive as no attempt has been made to quantify the effects of thosedifferences, nor has a complete reconciliation of Indian GAAP, U.S. GAAP and IFRS been undertaken.Had any such quantification or reconciliation been done by our management, other potential significantaccounting and disclosure differences may have come to our attention which have not been identifiedbelow.Potential investors should consult their own professional advisors for an understanding of the principaldifferences between the Indian GAAP, U.S. GAAP and IFRS and how these differences might affect thefinancial statements of our Company as given in this Red Herring Prospectus.Particulars Indian GAAP U.S. GAAP IFRSFormat and contentof financialstatementsChanges inAccounting policiesEntities are required to presentbalance sheets, profit and lossaccounts and, if listed orproposing listing, cash flows fortwo years together withaccounting policies, schedulesand notes. Format forpresentation of financialstatements is as prescribed bythe relevant statute.Any change in an accountingpolicy which has a materialeffect should be disclosed. Theimpact of, and the adjustmentsresulting from such change, ifmaterial, should be shown in thefinancial statements of theperiod in which such change ismade, to reflect the effect ofsuch change. Where the effect ofsuch change is not ascertainable,wholly or in part, the fact shouldbe indicated.If a change is made in theaccounting policies which hasno material effect on thefinancial statements for thecurrent period, but which isreasonably expected to have amaterial effect in later periods,the fact of such change shouldbe appropriately disclosed in theperiod in which the change isadopted.Entities are required to presentbalance sheets, income statements,comprehensive income statements,statements of shareholders’ equity,cash flows together withaccounting policies and notes tothe financial statements for aperiod of two years. PublicCompanies are required to attachthe aforesaid statements for aperiod of three years except thebalance sheet for the third year.No specific format is mandated.Generally items are presented onthe face of the balance sheet indecreasing order of liquidity.Income statement items may bepresented using a single-step or amultiple step format. Expendituremust be presented by function.Any change in an accountingpolicy should be accounted forretrospectively, with comparativeinformation restated and theamount of the adjustment relatingto prior periods adjusted againstthe opening balance of retainedearnings of the earliest yearpresented. An exemption applieswhen it is impracticable to changecomparative information.Entities are required to presentbalance sheets, incomestatements, statements of changesin equity, cash flows and notes,comprising a summary ofsignificant accounting policiesand other explanatory notes for aperiod of two years.Any change in an accountingpolicy should be accounted forretrospectively, with comparativeinformation restated and theamount of the adjustment relatingto prior periods adjusted againstthe opening balance of retainedearnings of the earliest yearpresented. An exemption applieswhen it is impracticable tochange comparative informationF-32

Particulars Indian GAAP U.S. GAAP IFRSRevenueRecognition -InterestPrior Period ItemsExtraordinary itemsForeign exchangetranslationInterest income is recognized ona time proportion basis takinginto account the amountoutstanding and the rateapplicable.Adjust the error or omission inthe period in which it isdiscovered and corrected withappropriate disclosure.Extraordinary items of such sizeand nature that requires separatedisclosure to explain theperformance of the entity aredisclosed separately, net ofincome taxes, on the face of theincome statement or in the notes,provided the total of all suchitems are shown on the face ofthe income statement.Exceptional items are usuallyshown on the face of the incomestatement or in the notes to thefinancial statements.AS-11 “The Effects of Changesin Foreign Exchange Rates”deals with accounting forforeign exchange transactions.Transactions in foreign currencyare recorded at the exchange rateprevailing on the date of thetransaction. Monetary items arerestated at year-end exchangerates. Exchange differencesarising on transactions andtranslation of monetary items arerecognized as income or expensein the year in which they arise.Foreign exchange losses thatrelate to foreign borrowingsincurred to finance an asset aretreated as a part of borrowingcost and are capitalized subjectto exercise of the option by theentity only up to April 1, 2011.Translation differences arisingon a monetary item that, insubstance, forms part of anenterprise’s net investment in anon-integral foreign operationshould be accumulated in aforeign currency translationreserve in the enterprise’sfinancial statements until thedisposal of the net investment, atwhich time they should berecognized as income or asexpenses.Translation of foreign operationsintegral to the reportingenterprise requires foreignexchange gains or losses to berecognized in the incomestatement.Interest income is recognizedusing the effective interestmethod.Material prior period errors arecorrected retrospectively in thefirst financial statements issuedafter their discovery.Disclosure of individualextraordinary items; includinggains or losses from the earlyextinguishments of debt, ifmaterial, net of taxes, is madeeither on the face of the incomestatement or in the notes to thefinancial statements, provided thetotal of all such items is shown onthe face of the income statement.Disclosure of tax impact is eitheron the face of the incomestatement or in the notes tofinancial statements.Gains or losses arising fromforeign currency transactions areincluded in determining netincome. For the purposes ofconsolidating a foreign subsidiary,its financial statements aretranslated into the parent’sreporting currency. Assets andliabilities are translated using thebalance sheet rate of exchange.Amounts in the income statementsare translated using the weightedaverage rate for the period.Translation differences that ariseare reported in a separatecomponent of shareholders’equity. The concept ofcapitalization of exchangefluctuations, arising from foreignliabilities incurred for acquiringfixed assets does not exist.Interest income is recognizedusing the effective interestmethod.Material prior period errors arecorrected retrospectively in thefirst financial statements issuedafter their discovery.The concept of extraordinaryitems does not exist .Gains or losses arising out offoreign exchange translationdifferences are required to beincluded in the determination ofnet income, unless thesedifferences are regarded as anadjustment to interest costs,which are eligible forcapitalization as borrowing costson fixed assets. For the purposesof consolidating a foreignsubsidiary, its financialstatements are translated into theparent’s reporting currency.Assets and liabilities aretranslated using the balance sheetrate of exchange. Amounts in theincome statements are translatedusing the weighted average ratefor the period. Translationdifferences that arise are reportedin a separate component ofshareholders’ equity. The conceptof capitalization of exchangefluctuations, arising from foreignliabilities incurred for acquiringfixed assets does not existF-33

Particulars Indian GAAP U.S. GAAP IFRSDeferred TaxationProposed dividendEmployeeBenefits/RetirementBenefitDepreciationOff-balance sheetitemsDeferred taxes are required to beprovided for the tax effect oftiming differences betweentaxable income and accountingincome using substantivelyenacted tax rates. Deferred taxassets arising due to unabsorbeddepreciation or carry forward oflosses are recognized only to theextent that there is virtualcertainty that sufficient futuretaxable income will be availableagainst which such deferred taxassets can be realized. Otherdeferred tax assets arerecognized and carried forwardonly to the extent that there is areasonable certainty thatsufficient future taxable incomewill be available against whichsuch deferred tax assets can berealized.Proposed dividends arerecognized in the financialstatements in the period to whichthey relate, even if they aresubject to shareholders’approval.Long term employee benefits areaccounted for on actuarialvaluation basis. Actuarial gains/losses are fully recognized in theyear they accrue.Depreciation is generallycharged at rates prescribed bythe Companies Act. These ratesare the minimum rates, andcompanies are permitted tocharge depreciation at higherrates, in order to write off thecost of assets over their usefullives, if shorter.Contingencies are possibleobligations whose outcome willbe confirmed only on theoccurrence or nonoccurrence ofuncertain future events outsidethe entity’s control. It can alsobe a present obligation that isnot recognized because it is notprobable that there will be anoutflow of economic benefits orthe amount of the outflowcannot be reliably measured.Contingent liabilities aredisclosed unless the probabilityof outflows is remote.Determination of liability mainlydriven by Law.Deferred tax liabilities and assetsare recorded for the tax effect oftemporary differences between thecarrying amount and tax base ofassets and liabilities and operatingloss carry-forwards, at currentlyenacted tax rates, expected to be inforce when the temporarydifferences reverse. Changes intax rates are reported in theincome statement in the period ofenactment.A valuation allowance is madeagainst deferred taxes if, based onthe weight of available evidence, itis more likely than not that someportion or all of the deferred taxasset will not be realized.Proposed dividends are disclosedin the notes to the financialstatements.Long term employee benefits areaccounted for on actuarialvaluation basis. Actuarial gains/losses are subject to corridorapproach and actuarial gains/losses beyond the corridor arerecognized over the averageworking life of the employees.Depreciation is provided in asystematic and rational mannerover the estimated usefuleconomic life of the assets.Securities Exchange Commissionregistrants are required to provideextensive disclosures of materialoff-balance sheet items, contingentliabilities and financial guarantees.Commitments and contingenciesare required to be disclosed.A possible obligation whoseoutcome will be confirmed onlyon the occurrence ornonoccurrence of uncertain futureevents outside the entity’s control.It can also be a present obligationthat is not recognized because it isnot probable that there will be anoutflow of economic benefits, orthe amount of the outflow cannotbe reliably measured. Contingentliabilities are disclosed unless theprobability of outflows is remote.Deferred income taxes arerecognized for the future taxeffects of temporary differencesbetween the carrying amount andtax base of assets and liabilitiesand operating loss carryforwards,at the enacted orsubstantively enacted tax rates.Deferred tax assets and liabilitiesmust be recognized regardless ofwhen the temporary difference islikely to reverse. Deferred taxassets must be recognized when itis probable that sufficient taxableprofits/ reversible differences willbe available against which thedeferred tax assets can beutilized.Proposed dividends are disclosedin the notes to the financialstatements.Long term employee benefits areaccounted for on actuarialvaluation basis. Actuarial gains/losses are subject to corridorapproach and actuarial gains/losses beyond the corridor arerecognized over the averageworking life of the employees.However, immediate recognitionof actuarial gains and losses ispermitted through othercomprehensive income.The depreciable amount of anitem of property, plant andequipment is allocated on asystematic basis over its usefullife.Contingencies are possibleobligations whose outcome willbe confirmed only on theoccurrence or nonoccurrence ofuncertain future events outsidethe entity’s control. It can also bea present obligation that is notrecognized because it is notprobable that there will be anoutflow of economic benefits orthe amount of the outflow cannotbe reliably measured. Contingentliabilities are disclosed unless theprobability of outflows is remote.Determination of liability mainlydriven by constructiveobligations.F-34

Particulars Indian GAAP U.S. GAAP IFRSFair values offinancialinstrumentsFinancial assets and liabilitiesare recognized and carried atcost. There is a requirement ofdisclosure of fair value, in fewcases.Financial assets and liabilities arerecognized at fair value andcarried at fair value or atamortized cost, depending uponthe category of financial assetsand liabilities.Financial assets and liabilities arerecognized at fair value andcarried at fair value or atamortized cost, depending uponthe category of financial assetsand liabilities.F-35

FINANCIAL INDEBTEDNESSSet forth below is a brief summary of the Company’s borrowings outstanding as on December 31, 2009:(In Rs. Million)S. No. Nature of Borrowing Amount1. Unsecured Borrowings 6,158.62. Secured Borrowings 11,305.1Total 17,347.5A. Unsecured Borrowings of the Company:Set forth below is a brief summary of our outstanding unsecured borrowings amounting to Rs 6,158.6Million as of December 31, 2009. All our unsecured borrowings are foreign currency borrowings whichhave been sanctioned to us in foreign currencies. As of December 31, 2009, approximately 36.1% of ouraggregate indebtedness is denominated in foreign currencies. Further all these loans have been guaranteedby the President of India. Moreover, except the World Bank loan which has been obtained for financingRHEP, all other unsecured loans have been obtained for financing NJHEP.S. No. Name ofLender(s)1. KfW 1 , Germany Export credit videloan agreement datedJuly 13, 19942. Eksportfinans 2(b) ,NorwayNature/ date of Loan Currency OriginalAmountSanctioned (In Rs.Million)Export credit videloan agreement datedJuly 13, 1994AmountOutstanding ason December31, 2009 (in Rs.Million)Interestrate ( % )p.a.RepaymenttermsEuro 2,386.5 148.0 6.635% 21consecutiveinstalmentspayablesemiannually andcommencingfrom31.01.2000NOK 1,056.1 334.0USD148.537.05.950% 24consecutiveinstalmentspayablesemiannually andcommencingfrom31.07.20003. NIB 2 , Finland Line of Credit videloan agreement datedAugust 2, 1994 asamended byaddendum dated May4, 20004. BNP Paribas 3 ,Paris, FranceExport credit videloan agreement datedAugust 30, 1996 andthe amendmentsthereto dated February7, 1997, May 11, 1997and June 21, 2001USD 557.5 278.7 Variablerate ofinterestfor eachinterestperiodequal tothe sum ofmarginplusLIBOR.25consecutiveinstalmentspayablesemiannually andcommencingfrom28.10.2002Euro 1,513.2 580.9 6.600% 20consecutiveinstalmentspayablesemiannually andcommencingfrom30.09.2002123

Notes:5. World Bank 4 ,USAExternal Assistancevide loan agreementdated January 15,2008USD 4,752.6 4,780.0 LIBORplusvariablespreadTotal 6,158.630consecutiveinstalmentspayablesemiannually andcommencingfrom15.05.20131. (a) The borrower shall not forgo the disbursement of the loan without prior written consent of KfW, Germany;(b) Cross default under loan facility with another foreign lender gives KfW, Germany the right to terminate if thesame is not rectified within 30 days following a demand from KfW, Germany;(c) The borrower shall not pledge, mortgage or sell the equipment either in whole or in part throughout theduration of this loan agreement without KfW, Germany’s prior consent; and(d) Prior consent of KfW, Germany required by the borrower for reduction in capital, merger, reorganisation,transfer of property and liquidation or division.2. (a) The borrower shall not create any lien over its assets as security for its external indebtedness unless the benefitof that lien is extended equally to the lender;(b) The lender has the right to terminate the contract if the right of the borrower to draw down the proceeds fromany other loan for the financing of the project is suspended, cancelled or terminated or if the borrower fails topay under any other loan and the failure continues for more than 30 days.3. (a) The borrower shall not create any lien over its assets as security for its external indebtedness unless the benefitof that lien is extended equally to the lender;(b) The borrower shall not assign its rights and obligations without prior written consent of the lenders;(c) Change in shareholding of the Company constitutes an event of default and gives the lenders the right to decareoutstanding amounts to be immediately payable within a period of one month of notice (in the absence of thedecision of the french autjorities suspending its option);(d) The lender has the right to terminate the contract if the right of the borrower to draw down the proceeds fromany other loan for the financing of the project is suspended, cancelled or terminated or if the borrower fails topay under any other loan and the failure continues for more tan 30 days.4. Except with the approval of World Bank, the Company shall not incur any debt, if after the incurrence of such debt,the ratio of debt to equity shall be greater than 4:1.B. Secured Long Term Loans availed of by the Company:Set forth below is a brief summary of the Company’s outstanding secured borrowings of Rs. 11,305.1million as of December 31, 2009. All these loans were obtained for financing NJHEP.124

S.No.Name ofLender(s)1 PFC 1 ,DelhiFacility/LoanDocumentationRs. 11,180 millionsanctioned by loanagreementdated March 29,2000which was furtherincreasedto 14,380 million videan agreement dated June23, 2003and its amendment datedJune 28, 2004AmountOutstanding( in Rs.Million)Interest rate(%) p.a.7,190 Rate ofinterestprevailing atthe date ofeachdisbursementSecurity detailsPFC-1. First charge on pari passu basison all movable assets includingmovable plant and machinery,machinery spares, tools andaccessories, fuel stock spares andmaterials both present and futurevide hypothecation deed dated April25, 2003, joint hypothecation deeddated 22.03.2004 and supplementalhypothecation deed dated08.11.2004;Repaymentterms40 equalinstalmentspayablequarterlycommencing15.01.20052. Equitable mortgage of allimmovable properties pertaining tothe project by deposit of title deedswith IDBI Bank Limited by amemorandum of entry (“MoE”)dated October 27, 2004 as amendedby MoE dated January 23, 2008.LIC-1. Hypothecation of movableproperties (present and future) andreceivables by joint deed ofhypothecation dated March 22,2004 and supplementaryhypothecation deed datedNovember 8, 2004; and2. Equitable mortgage of allimmovable properties pertaining tothe project by deposit of title deedswith IDBI Bank Limited by MoEdated October 27, 2004 as amendedby MoE dated January 23, 2008.REC-1. Hypothecation of movableproperties (present and future) andreceivables by joint deed ofhypothecation dated March 22,2004 and supplementaryhypothecation deed dated October27, 2004; and2. Equitable mortgage of allimmovable properties pertaining tothe project by deposit of title deedswith IDBI Bank Limited by a MoEdated October 27, 2004 as amendedby MoE dated January 23, 2008..2 LIC 2 ,MumbaiRs 6,000 million videterm loan agreementdated 30-09-2003 whichwas subsequentlyreduced to 4,210 millionby amendment datedJune 28, 2004 to theagreement.1,973.4 9.31% p.a. 32 equalinstalmentspayablequarterlycommencing01.10.2005125

S.No.Name ofLender(s)3 REC 2 ,DelhiFacility/LoanDocumentationRs. 6,000 million videterm loan agreementdated 10-10-2003 whichwas subsequentlyreduced to 4,569 millionby an amendment datedOctober 26, 2004 to theterm loan agreement.AmountOutstanding( in Rs.Million)Total 11,305.1Interest rate(%) p.a.Security detailsRepaymentterms2,141.7 9.31% p.a. 32 equalinstalmentspayablequarterlycommencing15.10.2005Notes:1. (a) The Company shall not raise borrowing from any other sources for meeting any part of the cost of equipment etcfinanced through this loan;(b)The Company shall not transfer or abandon the project at any stage without the written consent of the corporation.2. (a) The Company shall not prepay the outstanding principal amounts of the loans in full or in part before the due dateexcept after obtaining the prior approval of the lender;(b)(c)(d)(e)(f)(g)The Company shall not declare any dividends on its share capital without prior consent of the LIC if it fails to meet itsobligations to pay interest or instalments;The Company shall not escrow its projects future cash flow or create any charge or lien or interest of whatsoevernature thereon without the prior approval of LIC;The Company shall not undertake any new projects or expansion or make any investments or take assets on leasewithout prior written permission of LIC;Project debt to equity ratio not to fall below 1:1 during the currency of the loan (where the debt means long termdebt i.e. more than one year and equity means paid up equity capital, paid up preference share capital, reserves andsurplus other than revaluation reserve);Asset coverage ratio shall not fall below 1.5 for the project and in the event of asset cover falling below 1.5, LIC willhave lien on other assets both present and future of the company. Asset will include capital work in progress and asper audited balance sheet.In case of default, the borrower shall not without the prior written consent of the lender:a. Amend its AoA and Memorandum of Association;b. Undertake any new project, modernisation etc.;c. Issue any debentures, raise any loans, issue equity etc.d. Prepay any loans;e. Pay any commissions to its promoters, directors, managers etc for furnishing guarantees, counterguarantees for undertaking any other liability in connection with any financial assistance obtained byborrower or obligation undertaken by the borrower for the project;f. Declare or pay any dividend unless dues to the borrower have been paid upto the date on which thedividend is proposed to be declared;g. Create any subsidiaries or permit any company to become its subsidiary;h. Undertake any merger, consolidation etc;i. Make any investment by way of deposit, loans , share capital etc;j. Revalue its assets at any time during the currency of the loan;k. Carry on any trading activity other than sale of its own products; etc.(h)(i)Further in the event of default of the borrower to pay dues or if the lender is of the view that the business of theborrower is conducted in a manner opposed to the public policy or in a manner prejudicial to the lenders interest, thelender shall have the right to require the borrower to restructure its management set up including the formation ofmanagement committees with such powers and functions as may be considered suitable by the lenders; andIn the event of default, each of the lenders shall have the right to appoint and withdraw from time to time one directoron the BOD of the borrower.126

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONSThe following management’s discussion and analysis of financial condition and results of operations shouldbe read in conjunction with our restated financial statements including the schedules, annexures and notesthereto and the reports thereon included elsewhere in this Red Herring Prospectus. The discussion in thissection contains forward-looking statements and reflects our current view with respect to future events andfinancial performance. Actual results may differ materially from those anticipated in these forward-lookingstatements as a result of certain factors, such as those set forth under “Risk Factors” on page xiii andelsewhere in this Red Herring Prospectus.Unless otherwise stated, the following discussion is based on our restated audited financial statements,which have been prepared in accordance with Indian GAAP and the Companies Act and restated inaccordance with the SEBI ICDR Regulations. Certain statistical information presented in this section hasbeen derived from our internal reporting systems and other sources. Our financial year ends on March 31of each year, and all references in this section to a particular “FY” are to the twelve-month period endedon March 31 of that year.OVERVIEWWe are a hydroelectric power generation company originally established as a joint venture between theGovernment and the state government of Himachal Pradesh to develop and operate the NJHPS. Based oninformation published by the CEA, the NJHPS is currently the largest operational hydroelectric powergeneration facility in India based on installed capacity, with an aggregate generation capacity of 1,500 MW,and is located on the Sutlej River in the state of Himachal Pradesh.We were incorporated in 1988 as a private limited liability company, and in August 1991, we officially tookover the construction and operation of the NJHPS from the HPSEB. In October 2003, the first 250MWhydroelectric power generation unit was commissioned at the NJHPS, and by May 2004, all six powergenerating units at the NJHPS had been commissioned and the NJHPS was fully operational. For the yearsended March 31, 2007, 2008 and 2009, the NJHPS generated 6,014 MU, 6,449 MU and 6,609 MU ofpower and for the nine months ended December 31, 2009, aggregate power generation at the NJHPSamounted to approximately 6,332 MU.The NJHPS is currently our only hydroelectric power project in operation. We are required to supply 12%of our annual generation from the NJHPS to the state of Himachal Pradesh free of cost and 1% will besupplied to a state-established local area development fund for the purposes of providing a regular stream ofrevenue for income generation and welfare schemes, creation of additional infrastructure and commonfacilities. As at the date of this Red Herring Prospectus, we have not supplied any power to the stateestablishedlocal area development fund, as may be required under a cabinet decision of the stategovernment of Himachal Pradesh, and may be required to do so in the future. See “Risk Factors—InternalRisk Factors—Risks Relating to Our Business—We may be required to allocate an additional onepercent of the power generated by the NJHPS to a local area development fund established by the stategovernment of Himachal Pradesh” on page xix. Out of the remaining 88% of power generated by theNJHPS (which will be reduced by 1% to 87% in the event we are required to supply power to the local areadevelopment fund), 25% is supplied to the state of Himachal Pradesh and the remainder is supplied tovarious states located in the Northern region of India pursuant to ten long-term power purchase agreements,two of which have expired and are in the process of being renewed.Through our construction and operation of the NJHPS, we have gained experience in the design,development, construction and operation of hydroelectric projects, and the execution and management of allaspects of such projects from the initial stages of concept to the commissioning, operation and maintenanceof such projects. We are currently constructing the Rampur Project, which is expected to be a 412 MWhydroelectric power generation facility located downstream from the NJHPS. The Rampur Project iscurrently projected to be completed and commissioned in 2013. We have also been awarded the rights todevelop and operate two hydroelectric projects with an expected aggregate generation capacity of 825 MWby the state government of Himachal Pradesh (in each of which we are expected to have a 51%participation interest). We have also entered into memoranda of understanding with the state government ofUttarakhand for three hydroelectric projects with an expected aggregate generation capacity of 363 MW.We have further agreed to participate in a joint venture with NHPC Limited and the state government of127

Manipur for the development and operation of a 1,500 MW hydroelectric power project to be located inManipur. We have also diversified our operations to target hydroelectric power projects available outside ofIndia, and have been awarded the rights to construct and operate on a build, own, operate and transfer(BOOT) basis, a 900 MW hydroelectric power project to be located in the Sankhuwasabha district of Nepal,through participating in a competitive tender held by the Nepalese government. Through these projects, weexpect to increase our total installed power generation capacity by approximately 3,588 MW.We have also agreed to take a minority interest in a joint venture to be established for the development of atransmission line in the territory of India, which is part of a transmission line expected to connectDhalkewar in Nepal to Muzaffarpur in India, and also intend to expand into providing technical advisoryand consultancy services.We have historically been able to achieve high levels of operational efficiencies, which are reflectedthrough high average capacity indices for the NJHPS. Under the previous tariff regulations which wereeffective during this period, we were entitled to certain incentive payments based on our capacity indexlevels, as determined by the NRPC. Under the new tariff regime which is performance-based, we will beentitled to these incentive payments only if our monthly plant availability factor exceeds a pre-determinednormative annual plant availability factor applicable to the NJHPS of 82%. According to data published bythe NRPC, for the financial years ended March 31, 2007, 2008 and 2009, our annual plant availabilityfactor for the NJHPS (calculated as the average of our monthly plant availability factors in the period) was92.4%, 96.7% and 96.1%, respectively, which exceeded the normative annual plant availability factorapplicable to the NJHPS of 85% applicable in those years.Based on our restated audited financial statements for the years ended March 31, 2007, 2008 and 2009, wegenerated total revenues of Rs. 14,761.7 million, Rs. 14,622.8 million and Rs. 16,348.4 million,respectively, and profit before tax of Rs. 7,692.5 million, Rs. 8,178.0 million and Rs. 10,025.5 million,respectively.RECENT DEVELOPMENTSPreferential equity issue – the GoHP AllotmentIn April 2010, we issued 27,812,500 equity shares to the state government of Himachal Pradesh foraggregate consideration payable of Rs. 409.40 million, pursuant to a letter from the MoP (No. 23/24/2009-H-II) dated April 23, 2010, representing approximately 0.007% of the issued and paid-up capital of ourCompany prior to this Offer. As of the date of this Red Herring Prospectus, the state government ofHimachal Pradesh owns approximately 25.50% of our issued and paid-up capital.Withdrawal of ProjectIn October 2009, the state government of Himachal Pradesh notified our Company that it would betransferring the rights to construct and operate the 1,020 MW hydroelectric power plant to be located inKhab, which were originally awarded to us pursuant to a letter dated December 16, 2004 issued by thePrincipal Secretary (Power) to the state government of Himachal Pradesh (Reference Endst. No. MPP-F(2)8/2001/III/Shimla-2). We are currently in discussions with the state government of Himachal Pradesh inconnection with this purported transfer and as at the date of this Red Herring Prospectus, this matter is stilloutstanding.SUBSEQUENT EVENTSRequirement to provide additional energy free-of-costOn September 9, 2009, the state government of Himachal Pradesh issued a Press Note (No.884/2009-PUB),pursuant to which we are required to provide an additional one percent of the aggregate energy generated byour operational power projects located in the state of Himachal Pradesh to a local area development fundwhich has been established by the state government of Himachal Pradesh, with effect from September 30,2009.We have not been providing the required energy generation from the NJHPS to the local development fund,and may be required to do so retrospectively. See "Risk Factors--Internal Risk Factors- Risks Relating to128

Our Business – We may be required to allocate an additional one percent of the power generated by theNJHPS to a local area development fund established by the state government of Himachal Pradesh--” onpage xix.FACTORS AFFECTING OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONOur business, historical financial condition and results of operations have been affected by a number ofimportant factors, some of which we believe will continue to affect our financial condition and results ofoperations in the future.Recovery of annual fixed charges and other performance-based incentives under prevailing tariff ratesThe CERC sets tariffs for energy supplied by each power project on a case-by-case basis. In general, basedon prevailing tariff regulations, with effect from April 1, 2009, our tariffs are calculated by the CERC basedon the principle that if energy generation at a particular project meets certain predetermined performancetargets which have been specified for that project, the project operator is entitled to revenues fromelectricity generation which are sufficient to cover certain identified fixed costs and incorporates aguaranteed return on equity on a portion of the capital investment for that project, termed as annual fixedcharges. Annual fixed charges for a project are determined for a five-year tariff period based on petitionsfiled by the project operator for that period. During the period, annual fixed charges which are recovered bya project operator for each financial year during that five-year period are provisionally based on annualfixed charges for that project which have been approved by the CERC in the last financial year of theimmediately preceding five-year period, as increased by the amount of additional capital expenditureswhich have been certified by the auditors of the project operator, or which have been projected by theproject operator to be incurred for that financial year. A one-off adjustment is recorded for when the tariffpetition for the period has been approved by the CERC and a final tariff order has been issued. Based on theone-off adjustment, either final invoices for the period are issued to the beneficiaries under the PPAs forthat project (where the amount of the final annual fixed charges exceeds the provisional annual fixedcharges which have been invoiced during the year), or payments are made by the project operator to thosebeneficiaries (where the amount of the final annual fixed charges is less than the provisional annual fixedcharges which have been invoiced during the year). Simple interest is payable on the amount of the one-offadjustment based on the State Bank of India short-term prime lending rate on April 1 of the applicable year.Annual fixed charges for a hydroelectric power project are determined by aggregating the followingcomponents:• Return on equity on a pre-tax basis. Under prevailing Government policies in place to encouragedevelopment of the Indian power generation sector, electricity tariffs set for a project willincorporate a guaranteed return on equity on approved project costs which have been financedthrough equity participation by investors up to a specified threshold percentage. In the event thatthe percentage of equity financing for the project represents less than the specified thresholdpercentage, the guaranteed return on equity incorporated in the tariff will be based on that lowerproportion. Under the previous tariff regime, the guaranteed rate of return on equity to beincorporated in the tariff for a project was set at 14%. Under the current tariff regulations whichcame into effect on April 1, 2009, the guaranteed rate of return on equity to be incorporated in thetariff for a project was set at 15.5%, subject to grossing-up for applicable taxes. We have obtaineda special dispensation from the CERC such that tariffs for the NJHPS incorporate a guaranteed rateof return on equity based on prevailing rates on 50% of the project costs which have beenapproved by the CERC on March 31, 2004, representing the equity participation of ourshareholders in the project. However, the guaranteed rate of return on equity on additional capitalexpenditures which are incurred on the NJHPS in excess of Rs. 79,900.0 million will only beallowed with respect to 30% of such costs, in accordance with the prevailing equity participationthreshold.• Depreciation. Depreciation on a straight-line basis of up to 90% of the historical cost of an asset,based on the useful lives of assets as established pursuant to CERC guidelines.• Interest on outstanding debt. Under the current tariff regime, interest which is eligible for recoveryas an annual fixed charge component is based on the outstanding principal amount of the loan, and129

is capped by the amount of depreciation expense allowed for the financial year in question. Interestis calculated based on the weighted average rate of interest on outstanding principal amounts ofproject-related debt as at the beginning of the financial year. At the end of the financial year, actualinterest paid on project debt is calculated and is certified by the auditor and notified by the projectoperator to the CERC.• Operation and maintenance expenses. Operation and maintenance expenses are recoverable asfollows: (i) with respect to stations which have been in operation for more than five years,recovery is based on the average operation and maintenance expenses for the preceding year, (ii)with respect to stations which have been in operation for less than five years as on April 1, 2009,recovery is based on 2.0% of original project cost (excluding resettlement and rehabilitationworks). Further, for projects which commence operation prior to FY 2008, operation andmaintenance expenses shall be subject to escalation at a rate of 5.17% per annum for the periodending on March 31, 2008, and thereafter at a rate of 5.72% per annum, and (iii) with respect toprojects which have commenced commercial operations on or after April 1, 2009, recovery isbased on 2.0% of original project costs (excluding cost of rehabilitation and resettlement works),and shall be subject to escalation at a rate of 5.72% per annum thereafter. We recover operationand maintenance expenses based on the rates set forth in (ii) above for the NJHPS.• Interest on working capital. Working capital for a hydroelectric power station comprises (i)receivables equivalent to two months of fixed costs, (ii) maintenance and spare part costsequivalent to 15% of operation and maintenance expenses, and (iii) an amount equivalent to theoperation and maintenance expenses for a project for a one-month period. The rate of interestrecoverable on working capital is determined on a normative basis at the short-term prime lendingrate of the State Bank of India as on April 1, 2009 or on April 1 st of the year in which thegenerating station or a unit thereof is declared to have commenced commercial operations,whichever is later. At the end of the financial year, actual working capital on which interest ischargeable is calculated and is certified by the auditor and notified by the project operator to theCERC. We recover interest on working capital with respect to the NJHPS at the prime lending rateof the State Bank of India as on April 1, 2009 of 12.25% per annum.A power project operator is entitled to recover 50% of its annual fixed charges for a project through energycharges and up to the remaining 50% through capacity charges. Energy charges are based on sales ofelectricity and recovery of capacity charges is based on the project achieving an actual plant availabilityfactor for the month equal to or in excess of the normative annual plant availability factor that has beendetermined to apply to that type of power project. The normative annual plant availability factor has beenset at 85% for run-of-the-river with pondage schemes and 90% for storage schemes. However, thenormative annual plant availability factor for the NJHPS has been determined by CERC to be 82% due toabnormally high levels of silt in the Sutlej River, which require us to carry out capital maintenance on allour machines annually, thus, requiring increased maintenance periods. Annual fixed charges are recoveredthrough energy charges and capacity charges, which are invoiced on a monthly basis based on the regionalenergy account issued by the NRPC.Energy charges. Energy charge rates are calculated by dividing 50% of annual fixed charges by ex-bussaleable design energy (as calculated in megawatt hours) and multiplied by a factor of 10. Ex-bus saleabledesign energy is calculated exclusive of the auxiliary energy consumption by the power station and energywhich is required to be supplied to the home state free-of-cost. Accordingly, 12% of ex-bus energygenerated by the NJHPS is provided to the state government of Himachal Pradesh free-of-cost. Energycharges are recoverable monthly based on total scheduled energy for the month to be supplied tobeneficiaries (excluding free-of-cost energy) and the energy charge rates on an ex-bus basis. In the eventactual energy generation is in excess of design energy for that project, the energy charge rate will be cappedat Rs. 0.80 per unit.Capacity charges. The capacity charge for a month is calculated based on 50% of annual fixed charges andallocated on a monthly basis based on the number of days in that month, as multiplied by the ratio of actualplant availability factor for that month (“PAFM”) and the Normative Annual Plant Availability Factor(“NAPAF”). Capacity charges are recoverable on a performance basis, i.e. if the power station achieves amonthly plant availability factor which is equal to or in excess of a pre-specified normative annual plantavailability factor which has been set for power projects of that type. In the event that a power stationoperates at less than the normative annual plant availability factor applicable to it, it will only be eligible to130

ecover capacity charges on a pro rata basis based on the proportion which its actual monthly plantavailability factor bears to the applicable normative annual plant availability factor.The methodology by which a tariff for a particular project is determined based on prevailing tariffregulations currently in effect essentially means that in order to achieve the guaranteed rate of return on theequity portion of the project, the operational power project will be required to operate at a minimum levelwhich is set by the CERC in accordance with Government regulations, as the incentives in the case ofincreased availability and generation in excess of design energy are built into the tariff rates recovered fromthe beneficiaries. In the event that the power project fails to operate at the threshold level, the guaranteedrate of return will be reduced through reductions in recovery of capacity charges and/or reduced revenuefrom energy sales. However, the methodology also allows for efficiency improvements to increase the rateof return to equity investors on the project. For example, in the case of power stations which have beenoperational for more than five years, an increased rate of return on equity will result from any efficiencyimprovements which result in reductions in operations and maintenance expenses as compared to thepreceding year, and in the case of new power stations, an increased rate of return on equity may result fromany efficiency improvements which decrease the operation and maintenance expenses to less than 2.0% oforiginal project cost.In the event that our plant availability falls below the stipulated normative annual plant availability factordetermined by the CERC to apply to our projects as described above, or if we are unable to continue toimprove our efficiencies and reduce our operational and maintenance costs, the tariff rates we are able torecover may reduce accordingly, and our financial condition and results of operations may be adverselyaffected as a result.Unscheduled Interchange Charges. A project operator also receives or pays unscheduled interchangecharges in the event that the energy supplied by the project varies from scheduled energy (being the energyestimated and declared in advance by the project operator to be produced by the project for a specifiedperiod to the load dispatch center). The amount of such unscheduled interchange charges per unit is set bythe CERC in accordance with prevailing policies.For the nine months ended December 31, 2009, approximately 2.22% of our revenues were attributable tounscheduled interchange charges. In the event that we are unable to maintain or improve our performance atthese levels, which are above the minimum performance levels set with respect to our operations at theNJHPS by the CERC, our profitability, financial condition and results of operations may be adverselyaffected.Changes in Government policiesThe Government and Indian state governments have historically linked improved infrastructure in theenergy, transportation, urban infrastructure and industrial and commercial infrastructure sectors as theplatform for promoting and sustaining economic growth. We believe that the Government’s focus on, andsustained increases in budgetary allocation for, power, and the development of more structured andcomprehensive infrastructure policies that encourage greater private sector participation, as well asincreased availability of financing for power projects from international financial institutions, should resultin further power projects being offered for development in India. Accordingly, Government budgetaryallocations for power projects, priorities with respect to infrastructure development and capital expendituresfor power projects will be instrumental in determining the number and nature of power projects being madeavailable for development, which will in turn impact our business and prospects.In addition, the tariffs which we are entitled to charge for energy supplied by us under the terms of ourPPAs are determined by the CERC in accordance with prevailing tariff regulations. Historically, tariffregulations have been set by the Government and are generally effective for a period of five years,commencing on April 1 and ending on March 31. The previous tariff regulation was effective from April 1,2004 and expired in March 31, 2009, and the current tariff regulations have been adopted with effect fromApril 1, 2009 and will expire in March 31, 2014.Changes to the methodology for calculating capacity charges may have a negative impact on the amount werecover as capacity charges. Under the previous tariff regime which applied between April 1, 2004 toMarch 31, 2009, capacity charges were determined as being equivalent to annual fixed charges less aprimary energy charge, which was equal to the product of saleable primary energy (in MU) multiplied by131

the prime energy rate. To recover the full capacity charge, a power generating station was required toachieve a predetermined normative capacity index. If the power generating station did not have the targetedlevel of available capacity, capacity charges would be recoverable on a pro rata basis. Under the currenttariff regime, capacity charges for a hydroelectric power station will comprise 50% of the AFC and will becalculated using a formula that takes into account the actual plant availability factor achieved, as comparedto a prescribed project-specific annual plant availability factor.Accordingly, under the current tariff regime, actual operation of the power generation facility is required torecover capacity charges, whereas under the previous tariff regime, recovery of capacity charges was basedon available capacity regardless of the proportion of available capacity that was actually used. This meansthat our ability to recover our annual fixed charges in full will now depend on plant availability and ouractual production of electricity, which is in turn dependent on certain factors which may not be within ourcontrol, such as sedimentation and rainfall levels and availability of water supply. The switch to aperformance-based tariff regime may have an adverse impact on our revenues, profitability, financialcondition and results of operation should we not be able to achieve the predetermined annual plantavailability factor or fail to produce energy equivalent to the design energy of our power station for anyreason. See “Risk Factors—Internal Risk Factors- Risks Relating to Our Business—Our sales ofelectricity are regulated by directives issued by the Government and are subject to prevailing tariffpolicies and regulations, which are subject to change, and the switch to the current performance basedtariff regime may adversely affect us” on page xvi.Any adverse changes in Government policies or tariff regulations or their interpretation by the CERC maylimit our ability to recover payments due to us or the tariff charges we are allowed to impose on ourcustomers for sales of electricity produced by us, thereby adversely affecting our revenues, cash flows,profitability, financial condition and results of operations.Operations of the NJHPSAs at the date of this Red Herring Prospectus, all of our revenues are generated from the NJHPS located inthe state of Himachal Pradesh on the Sutlej river, which is one of the principal tributaries of the Indus riverin the southwest Himalayas. All of the power generated by our Company to our customers is presentlygenerated by this project. Accordingly, any disruptions to the operations of the NJHPS for any reasonwould significantly and adversely affect our revenues, profitability, cashflows, financial condition andresults of operations. See “Risk Factors—Internal Risk Factors- Risks Relating to Our Business—Ourfinancial performance is dependent on the NJHPS, which is our only operational project, and we aredependent on the NJHPS for our revenues and operating cashflows and to finance the development ofour other hydroelectric power projects” on page xiv.Hydrological and environmental conditionsThe quantity of energy generated by a hydroelectric power station is dependent on the availability of waterflow. This is unlike conventional power plants such as thermal power plants, where actual energy generatedis directly proportional to installed capacity and is subject only to machine availability and load demand.The planning of hydroelectric power projects in hydrological terms is based on the assumption that the pasthistorical availability of water will be repeated in the future. The design energy for hydroelectric powerstations is derived from hydrological studies carried out on historical discharge data. Design energy is takenas the energy that can be generated by utilizing the quantum of water available in a 90% dependable year,that is, water flow which is 90% probable. A hydroelectric power station is designed on the basis of wateravailability estimates taken for the design of the project. As this dependability is determined on a long termbasis, there may be some years or years in succession where projected generation may not be realized, andother years or years in succession where projected generation estimates are exceeded. See “Risk Factors—Internal Risk Factors- Risks Relating to Our Business—Our generation capacity is subject to substantialvariations in water flow, due to climatic conditions and varies seasonally” on page xxxi.In hydroelectric projects, sediment carried downstream by a river can be blocked where a dam isconstructed. This sediment may build up behind the dam wall and affect the capacity of a reservoir. Over80% of the total annual silt load is carried by rivers in the monsoon season. By devising an efficientreservoir management system, most of the annual silt load can be safely passed downstream. This generallyrequires us to keep the reservoir at a lower operating level during this period, and as a result, we typically132

experience some generation losses, even though the monsoon period generally means that there is highwater availability. However, high silt levels during this season also result in our having to shut downoperations when silt levels are higher than pre-determined levels for the safe operation of our plant andmachinery.Our sole operational project, the NJHPS, is located on the Sutlej River, which has historically had highsedimentation levels. We have in the past ceased generation operations at the NJHPS due to excessivelyhigh sedimentation levels, in order to prevent significant damage to our power generation plant andequipment. For the years ended March 31, 2007, 2008 and 2009, the number of days for which we wererequired to shut down our generation units due to high silt conditions was 31.87 days, 9.82 days and 11.73days, respectively. Our normative annual plant availability factor was set by the CERC at 82% (ascompared to 85% which is generally applicable to run-of-the-river with limited pondage schemes) as aresult of such hydrological conditions. See “Risk Factors—Internal Risk Factors- Risks Relating to OurBusiness—The accumulation of silt in waterways can damage our equipment and cause us to ceaseoperations for extended periods of time” on page xxxi.Operational disruptionsWe have in the past experienced disruptions to our operations from unforeseen events such as floods. Forexample, in September 2005, we experienced abnormally high water levels which resulted in the floodingof the powerhouse facility for the NJHPS, and significant damage to our power plant and equipment. As aresult of such flooding, we ceased operations at the NJHPS for a period of 44 days until October 2005. Weestimated our losses due to such flood damage to be in the region of approximately Rs. 3,140.0 million, ofwhich we were able to recover an aggregate of Rs. 3,080.0 million pursuant to our insurance policies.However the number of days that the NJHPS has not been operational has decreased primarily due toimprovements in our maintenance processes which decreased the number of days required for maintenanceof the NJHPS for the years ended March 31, 2007, 2008 and 2009 to 55 days, 32 days and 15 days,respectively. We have achieved this primarily by taking preventive measures such as coating ourequipments parts by abrasion resistant materials.General economic conditions and demand for electricityOur business is affected by general economic conditions prevailing in India which affect demand forelectricity, as well as by developments in the Indian energy sector which impact on electricity supply.The Government adopts a system of successive Five Year Plans which set out targets for economicdevelopment in various sectors, including the Indian energy sector. Each successive Five Year Plan hasincreased targets for additional generation capacity. The Tenth Plan, which was effective for FY2002 to FY2007, targeted aggregate generation capacity increases of 41,110 MW, of which 21,180 MW of actualaggregate generation capacity increases were achieved during this period. The Eleventh Plan targetsadditional generation capacity increases of 78,700.4 MW by the end of FY 2012, of which 23,530MW havealready been commissioned as of September 30, 2009.The liberalization of the Indian energy sector has resulted in a large number of independent powerproducers entering the market to bid for new power projects which are made available by the Governmentthrough competitive tender processes. Increases in competition for new hydroelectric power projects mayadversely affect our revenues, prospects, profitability, financial condition and results of operation. See“Risk Factors—Internal Risk Factors- Risks Relating to Our Business—We face extensive competitionfor the award of new hydroelectric power projects” on page xxxv.We are also dependent on general conditions affecting the Indian economy, as all of our assets andliabilities are located in India and all of our operating revenue is currently generated from our activitieswithin India. The rate of increase in electricity consumption in India has broadly reflected the increase in itsGDP growth rates. Accordingly, any changes in general economic conditions in India may impact ourcapacity utilization, which may in turn affect our business, revenues, profitability, financial condition andresults of operation.Eligibility for Tax Benefits and Incentives133

We have taken advantage of tax benefits in the form of loss carry forwards since the year ended March 31,2004, and have paid minimum alternative tax, or MAT, under Indian taxation laws commencing in the yearended March 31, 2005. MAT involves the payment of tax on a company’s book profits in the event that thetax otherwise payable in accordance with Indian tax laws falls below a specified threshold limit. We arealso eligible for tax benefits under section 80(I) of the Income Tax Act for which we have been availingbenefits since March 31, 2005. We anticipate that we will commence paying corporate income tax in theyear ended March 31, 2015 and our tax expenses will increase significantly as a result, thereby affecting ourprofitability. For more details on the taxes applicable to our Company, please see section titled “Statementof Tax Benefits” on page 40.Pursuant to the prevailing tariff regulations, we are allowed to recover return on equity net of taxes aslevied under the Income Tax Act. For the year ended March 31, 2009, revenue attributable to such taxesamounted to approximately 14.9% of our total electricity sales revenue. In the event of changes in futuretariff regimes disallowing such recovery net of taxes, our revenues, profitability, financial condition andresults of operation may be affected.Exchange Rate VolatilityAll of our revenues are denominated in Rupees, while we have outstanding indebtedness denominated inother currencies. Our reporting currency is the Rupee.A weakening of the Rupee may increase our operating expenses denominated in or tied to the value offoreign currencies, and would increase the Rupee cost of our foreign currency expenditures, which includeexpenditures for plant, equipment and machinery. In addition, the weakening of the Rupee would increasethe amount of Rupees required to pay interest expenses on our foreign currency denominated indebtedness,as well as any principal repayments to be made thereon. Fluctuations in exchange rates have in the pastresulted in our Company recording foreign exchange gains (losses) of Rs. 283.4 million, Rs. (159.8)million, Rs. 205.9 million, Rs. 143.7 million and Rs. 555.0 million in FY 2005, FY 2006, FY 2007, FY2008 and FY 2009, respectively. These foreign exchange gains and losses resulted primarily from therestatement of foreign currency denominated loans, which did not have any impact on our cash flows otherthan an impact on tax expenses. As of December 31, 2009, approximately 36.1% of our total indebtednesswas denominated in U.S. dollars and other foreign currencies.Interest Rate VolatilityWe are dependent on external sources of funds to finance the development of our hydroelectric powerprojects. Significantly all of our outstanding debt obligations are subject to floating interest rates. Inaddition, as we continue to develop our hydroelectric power projects, we expect to incur more floating ratedebt obligations for the purposes of financing the construction and development of these projects.Accordingly, any increases in our interest expense from interest rate movements may increase our projectdevelopment costs and cost of capital, and may have an adverse effect on our financial results and businessprospects.Critical Accounting PoliciesOur financial statements are prepared in accordance with Indian GAAP. The financial statements areprepared under the historical cost convention, on the accounting principles of a going concern and inaccordance with applicable accounting standards. Our significant accounting policies are set forth inAnnexure IV to our audited restated financial statements included on page F-1. Indian GAAP requires thatwe adopt accounting policies and make estimates that our Directors believe are the most appropriate in thecircumstances for the purposes of giving a true and fair view of our results of operations and theunderstanding of our financial condition and results of operations. The preparation of our financialstatements requires difficult and subjective judgments to be made in selecting appropriate assumptions andestimates which may affect the amounts reported in our financial statements. Our management bases itsestimates and judgments on historical experience and various other assumptions that it believes arereasonable under the circumstances, and which are subject to an inherent degree of uncertainty. Actualresults may differ significantly from those estimates and judgments under different assumptions orconditions.Revenue Recognition134

Revenue is recognized once a customer is invoiced, based on the units of energy allocated to such customerin the monthly generation report issued by the NRPC.Fixed assetsFixed assets are recorded at historical cost which includes purchase price and any impairment in value, lessaccumulated depreciation, and includes fixed assets situated on land which is not owned by the Company.Capital expenditure on assets not owned by the Company are capitalized as capital work in progress/fixedassets, and are transferred to the fixed asset account upon title to such assets being transferred to theCompany on completion of construction.Machinery sparesMachinery spares which are procured along with related plant and machinery, or which are subsequentlyacquired are capitalized and depreciated fully over the residual useful life of the plant and machinery whichit is intended to be used for. Replacement spare parts which are used in regular maintenance are fullycharged to revenue in the year in which these spares are replaced except in the case where such spares canbe repaired and reused. Other spares are expensed when consumed.Capital work in progressFor works which are to be constructed, the value of construction supplies received on-site or at theconstruction store and accepted as such are treated as capital work in progress. Certain centralized corporateoffice expenses are allocated to the capital work in progress account of each project under construction andare capitalized on the commissioning of the relevant project.Survey and investigation expenses incurred in the initial stages of a project are carried as capital work inprogress and capitalized as a project cost on the completion of the construction of the relevant project. Inthe case of projects which are abandoned, such expenses are expensed.Expenditures relating to work under construction are accounted for based on the construction certificatesreceived from the relevant contractor, and as accepted by our Company.Depreciation, Amortization and Impairment of AssetsDepreciation is charged on a straight-line basis of up to 90% of the cost of an asset, in accordance with rateswhich have been specified by the CERC. Assets which have not been specified in CERC regulations aredepreciated on a straight-line basis at rates specified in the Income Tax Act 1961, except in the case ofcomputers and peripherals which are depreciated on a straight-line basis at 25% per annum.InventoriesInventories are valued at the lower of cost based on either a weighted average basis or net realizable value.Foreign exchange transactionsForeign currency transactions are recorded at the exchange rate prevailing on the date of the transaction.Monetary items denominated in foreign currency are restated at year end at exchange rates prevailing on thebalance sheet date.Exchange rate differences, except to the extent considered as adjustments to borrowing costs are recognizedas income or expense in the period in which such difference arises (in the case of operational projects) andto EDC (in the case of projects under construction).Borrowing costsBorrowing costs (including exchange rate differences) directly attributable to the acquisition andconstruction of a qualifying fixed asset are capitalised as part of the cost of such asset up to the date whensuch asset is ready for its intended use. Other borrowing costs are charged to the profit and loss account.135

Employee benefitsProvisions for gratuity, leave encashment, leave travel concession and post retirement benefits are made onthe basis of actual valuation at the end of the financial year. Provident fund liabilities are accounted for onan accrual basis.Taxation on IncomeCurrent tax is the amount of tax payable on the taxable income for the current year as per the provisions ofthe I.T. Act, 1961. Tax credit is recognised in respect of Minimum Alternate Tax (MAT) based onsatisfactory evidence that the normal income tax will be payable within the statutory time frame and thesame is reviewed at each balance sheet date.The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognisedusing the tax rates that have been enacted or substantively enacted by the balance sheet date.Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can berealized in the future; however where there is unabsorbed depreciation or carry forward loss under taxationlaws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets.Deferred tax assets are reviewed at each balance sheet date and written down or written up to reflect theamount that is reasonably/virtually certain as the case may be to be realised.Description of Key Line ItemsTotal IncomeTotal income comprises sales of energy, and other income. The following table shows the breakdown of ourincome and each item netted against such income as a percentage of total income for the periods stated:Nine months endedDecember 31, Year ended March 31,2009 2009 2008 2007 2006 2005(Rs. In mns) (%) (Rs. inmns)(%) (Rs. inmns)(%) (Rs. inmns)(%) (Rs. inmns)(%) (Rs. inmns)(%)Income:Sales 14,231.0 94.2 14,907.8 91.2 13,567.5 92.8 14,094.6 95.5 10,623.6 78.6 12,775 95.0Other869.0 5.8 1,440.6 8.8 1055.3 7.2 667.1 4.5 2885.8 21.4 674.2 5.0incomeTotalincome15,100.0 100.0 16,348.4 100.0 14,622.8 100.0 14,761.7 100.0 13,509.4 100.0 13,449.2 100.0Sales. Sales comprises sale of electricity to our customers, which are state electricity boards and distributionlicensees in the Northern Indian region and the Government through the Ministry of Power. Our sales ofelectricity are made pursuant to long-term power purchase agreements, or PPAs, which generally run for aninitial term of five years and are typically renewed or extended for a further period of five years after theinitial term expires. We have entered into ten PPAs with respect to the NJHPS, of which two are currentlyin the process of being renewed. While generation capacity has increased significantly in recent years,demand for electricity in India is still substantially higher than the available supply. As a result, we have nothad difficulty entering into PPAs to cover our capacity and do not expect to encounter difficulties in doingso in the near future. The tariff rates with respect to our PPAs are determined by prevailing tariffregulations and policies set by the CERC.Other income. Other income comprises income from interest on bank deposits and late payment charges.ExpendituresExpenditures comprise generation, administration and other expenses, depreciation for the current year aswell as writedowns relating to previous years, provisions and writebacks (net) and interest and financecharges. The following table shows the breakdown of each expenditure item as a percentage of totalexpenditure for the periods stated:136

Nine months endedDecember 31, Year ended March 31,2009 2009 2008 2007 2006 2005(Rs. inmns) (%)(Rs. Inmns) (%)(Rs. Inmns) (%)(Rs. inmns) (%)(Rs. inmns) (%)(Rs. inmns) (%)Expenditures:Generation,administrationand otherexpenses 1,099.1 19.1 1,775.1 28.1 1,498.7 23.3 1,383.3 19.6 1,248.2 17.9 1,049.2 14.4Depreciation 3,259.9 56.6 2,342.3 37.0 2,399.2 37.2 2,456.1 34.7 2,325.6 33.3 2,182.8 29.9Interest andfinance charges 1,396.2 24.3 2,205.5 34.9 2,546.9 39.5 3,229.8 45.7 3,415.3 48.9 4,075.4 55.8Total expenditures 5,755.2 100.0 6,322.9 100.0 6,444.8 100.0 7,069.2 100.0 6,989.1 100.0 7,307.4 100.0Generation, administration and other expenses. Generation, administration and other expenses includeexpenses related to repairs and maintenance, employee remuneration and benefits, consumption of storesand spares, rent, rates, taxes, insurance security, travel and other expenses.Depreciation – current. Depreciation – current comprises depreciation on fixed assets, including plant andmachinery and civil work structures.Interest and finance charges. Interest and finance charges comprise interest expense on term loans. Foraccounting purposes, our borrowings are denominated in Rupees including those raised in foreigncurrencies, primarily consisting of EUR, NOK and the U.S. dollar. Borrowing costs related to constructionare capitalized as interest during construction.Results of OperationsThe following table provides certain information with respect to our revenues, expenditures and profits byshowing each item as a percentage of total revenues for the periods indicated. This table should be readtogether with our restated audited financial statements for the relevant periods, including the notes thereto,which appear elsewhere in this Prospectus.We have restated our audited financial information for the financial years ended March 31, 2005 to 2009and the nine months ended December 31, 2009 in compliance with the SEBI ICDR Regulations. We haverestated each individual line item in our income statement for these periods.For theFor the Year EndedParticularsninemonthsEndedDecember31, 2009March 31,2009March 31,2008March 31,2007March 31,2006March 31,2005(Rs. in mns) (Rs. in mns) (Rs. in mns) (Rs. in mns) (Rs. in mns) (Rs. in mns)INCOMESales (Net) 14,231.0 14,907.8 13,567.5 14,094.6 10,623.6 12,775.0Other Income 869.0 1,440.6 1,055.3 667.1 2,885.8 674.2Total 15,100.0 16,348.4 14,622.8 14,761.7 13,509.4 13,449.2EXPENDITUREGeneration Administration and Other Expenses 1,099.1 1,775.1 1,498.7 1,383.3 1,248.2 1,049.2Depreciation 3,259.9 2,342.3 2,399.2 2,456.1 2,325.6 2,182.8Interest and Finance Charges 1,396.2 2,205.5 2,546.9 3,229.8 3,415.3 4,075.4Total 5,755.2 6,322.9 6,444.8 7,069.2 6,989.1 7,307.4PROFIT BEFORE TAX 9,344.8 10,025.5 8,178.0 7,692.5 6,520.3 6,141.8Provision for TaxationIncome TaxCurrent Tax 1,591.1 2,425.5 1,002.4 1,185.5 659.4 242.3Fringe Benefit TaxCurrent Year - 6.7 6.4 7.1 6.5 -Wealth Tax - 0.1 0.1 0.1 0.1 -137

For theFor the Year EndedParticularsninemonthsEndedDecember31, 2009March 31,2009March 31,2008March 31,2007March 31,2006March 31,20051,591.1 2,432.3 1,008.9 1,192.7 666.0 242.3Deferred Tax 348.9 2,685.9 1,820.6 646.4 535.3 616.5Less: Recoverable/Payable 348.9 2,685.9 1,820.6 646.4 535.3 616.5Total Provision for Taxation 1,591.1 2,432.3 1,008.9 1,192.7 666.0 242.3PROFIT AFTER TAX 7,753.7 7,593.2 7,169.1 6,499.8 5,854.3 5,899.5Balance brought forward from last year 19,677.4 15,828.0 11,513.5 7,743.3 3,707.0 (562.9)Total available for Appropriation 27,431.1 23,421.2 18,682.6 14,243.1 9,561.3 5,336.6APPROPRIATIONSDividendInterim 800.0 1,100.0 1,360.0 666.7 - 341.4Proposed - 2,100.0 1,080.0 1,683.3 1,594.3 1,090.2Total Dividend 800.0 3,200.0 2,440.0 2,350.0 1,594.3 1,431.6Corporate Tax on DividendInterim 136.0 186.9 231.1 93.5 - 45.1Proposed - 356.9 183.5 286.1 223.7 152.9Total Tax on Dividend 136.0 543.8 414.6 379.6 223.7 198.0BALANCE CARRIED TO BALANCE SHEET 26,495.1 19,677.4 15,828.0 11,513.5 7,743.3 3,707.0Year ended March 31, 2009 compared to year ended March 31, 2008Income. Income increased by approximately 11.8% from Rs. 14,622.8 million in FY 2008 to Rs.16,348.4 million in FY 2009, primarily attributable to increases in net sales and other income.Net sales. Net sales increased by approximately 9.9% from Rs. 13,567.5 million in FY 2008 to Rs.14,907.8 million in FY 2009, primarily due to an increase in saleable energy from 5,619 MU in FY 2008 to5,762 MU in FY 2009.Other income. Other income increased by approximately 36.5% from Rs. 1,055.3 million in FY2008 to Rs. 1,440.6 million in FY 2009, primarily due to increases in interest income from our bankdeposits.Expenditures. Expenditures decreased by approximately 1.9% from Rs. 6,444.8 million in FY2008 to Rs. 6,322.9 million in FY 2009, primarily due to decreases in interest and finance charges, as offsetby increases in generation, administration and other expenses.Generation, administration and other expenses. Generation, administration and other expensesincreased by approximately 18.4% from Rs. 1,498.7 million in FY 2008 to Rs. 1,775.1 million in FY 2009,primarily due to provisions which were made for retrospective increases in employee salaries and wages,pursuant to directives issued by the Department of Public Enterprises. See “Risk Factors—Internal RiskFactors- Risks Relating to Our Business—Recent announcements by the Government relating toincreased wages for government employees will increase our expenses” on page xix.Depreciation. Depreciation expenses decreased by approximately 2.4% from Rs. 2,399.2 millionin FY 2008 to Rs. 2,342.3 million in FY 2009, primarily due to certain assets having been fully depreciatedin the prior period.Interest and finance charges. Interest and finance charges decreased by approximately 13.4% fromRs. 2,546.9 million in FY 2008 to Rs. 2,205.5 million in FY 2009, primarily due to principal repaymentsmade on our existing debt obligations.Profit before tax. For the reasons stated above, profit before tax increased by approximately 22.6%from Rs. 8,178.0 million in FY 2008 to Rs. 10,025.5 million in FY 2009.138

Taxes. Tax expenses increased by approximately 141.1% from Rs. 1,008.9 million in FY 2008 toRs. 2,432.3 million in FY 2009, primarily due to increases in income tax and in deferred tax.Income tax – current. Income tax – current increased by approximately 142.0% from Rs. 1,002.4million in FY 2008 to Rs. 2,425.5 million in FY 2009, primarily due to increases in net sales and in taxes onadvances in depreciation.Fringe benefit tax – current. Fringe benefit tax – current increased by approximately 4.7% fromRs. 6.4 million in FY 2008 to Rs. 6.7 million in FY 2009, primarily due to increased expenditure.Wealth tax. Wealth tax stayed constant at Rs. 0.1 million between FY 2008 and FY 2009.Deferred tax. Deferred tax expense increased by approximately 47.5% from Rs. 1,820.6 million inFY 2008 to Rs. 2,685.9 million in FY 2009, primarily due to increased provisions being made in relation toallowable depreciation in accordance with CERC regulations and the income tax regulations.Profit after tax. For the reasons stated above, profit after tax increased by approximately 5.9%from Rs. 7,169.1 million in FY 2008 to Rs. 7,593.2 million in FY 2009.Year ended March 31, 2008 compared to year ended March 31, 2007Income. Income decreased by approximately 0.9% from Rs. 14,761.7 million in FY 2007 to Rs.14,622.8 million in FY 2008, primarily attributable to decreases in net sales, as offset by an increase inother income.Net sales. Net sales decreased by approximately 3.7% from Rs. 14,094.6 million in FY 2007 toRs. 13,567.5 million in FY 2008, primarily due to our net sales in FY 2007 being comparatively higher dueto recovery of pass-through charges on account of income taxes.Other income. Other income increased by approximately 58.2% from Rs. 667.1 million in FY2007 to Rs. 1,055.3 million in FY 2008, primarily due to increase in interest income from our bankdeposits.Expenditures. Expenditures decreased by approximately 8.8% from Rs. 7,069.2 million in FY2007 to Rs. 6,444.8 million in FY 2008, primarily due to decreases in interest and finance charges, offset byincrease in generation, administration and other expenses.Generation, administration and other expenses. Generation, administration and other expensesincreased by approximately 8.3% from Rs. 1,383.3 million in FY 2007 to Rs. 1,498.7 million in FY 2008,primarily due to increases in wages and salaries expenses, in line with inflationary increases.Depreciation. Depreciation expenses decreased by approximately 2.3% from Rs. 2,456.1 millionin FY 2007 to Rs. 2,399.2 million in FY 2008, primarily due to certain assets having been fully depreciatedin the prior period.Interest and finance charges. Interest and finance charges decreased by approximately 21.1% fromRs. 3,229.8 million in FY 2007 to Rs. 2,546.9 million in FY 2008, primarily due to repayment of principalon loans reducing the outstanding principal amounts of our debt obligations.Profit before tax. For the reasons stated above, profit before tax increased by approximately 6.3%from Rs. 7,692.5 million in FY 2007 to Rs. 8,178.0 million in FY 2008.Taxes. Tax expenses decreased by approximately 15.4% from Rs. 1,192.7 million in FY 2007 toRs. 1,008.9 million in FY 2008, primarily due to decreases in current income tax expenses, as offset byincreases in deferred tax expenses.Income tax – current. Income tax – current decreased by approximately 15.4% from Rs. 1,185.5million in FY 2007 to Rs. 1,002.4 million in FY 2008, due to certain tax assessments which were receivedfrom the tax authorities in relation to treatment of depreciation.139

Fringe benefit tax – current. Fringe benefit tax – current decreased by approximately 9.9% fromRs. 7.1 million in FY 2007 to Rs. 6.4 million in FY 2008, primarily due to changes in applicableregulations.Wealth tax. Wealth tax stayed constant at Rs. 0.1 million between FY 2007 and FY 2008.Deferred tax. Deferred tax expense increased by approximately 181.7% from Rs. 646.4 million inFY 2007 to Rs. 1,820.6 million in FY 2008, primarily due to increased provisions being made in relation toallowable depreciation in accordance with CERC regulations and the income tax regulations.Profit after tax. For the reasons stated above, profit after tax increased by approximately 10.3 %from Rs. 6,499.8 million in FY 2007 to Rs. 7,169.1 million in FY 2008.Year ended March 31, 2007 compared to year ended March 31, 2006Income. Income increased by approximately 9.3% from Rs. 13,509.4 million in FY 2006 to Rs.14,761.7 million in FY 2007, primarily attributable to increases in net sales, offset by a decrease in otherincome.Net sales. Net sales increased by approximately 32.7% from Rs. 10,623.6 million in FY 2006 toRs. 14,094.6 million in FY 2007, primarily due to our net sales in FY 2007 being comparatively higher dueto a significant increase in our energy generation from 4,401.4 MU in FY 2006 to 6,014.5 MU in FY 2007and full recovery of annual fixed charges in FY 2007. We did not recover 100% of annual fixed charges inFY 2006 due to flood-related damage at the NJHPS which necessitated cessation of operations.Other income. Other income decreased by approximately 76.9% from Rs. 2,885.8 million in FY2006 to Rs. 667.1 million in FY 2007, primarily due to decreases in interest income received on bankdeposits and due to a one-off receipt of insurance proceeds in FY 2006.Expenditures. Expenditures increased by approximately 1.2% from Rs. 6,989.1 million in FY2006 to Rs. 7,069.2 million in FY 2007, primarily due to increases in generation, administration and otherexpenses, offset by decrease in interest and finance charges.Generation, administration and other expenses. Generation, administration and other expensesincreased by approximately 10.8% from Rs. 1,248.2 million in FY 2006 to Rs. 1,383.3 million in FY 2007,primarily due to increases in repairs and maintenance expenses related to electro-mechanical works.Depreciation. Depreciation expenses increased by approximately 5.6% from Rs. 2,325.6 million inFY 2006 to Rs. 2,456.1 million in FY 2007, primarily due to certain assets being capitalised.Interest and finance charges. Interest and finance charges decreased by approximately 5.4% fromRs. 3,415.3 million in FY 2006 to Rs. 3,229.8 million in FY 2007, primarily due to repayments of principalon outstanding loans.Profit before tax. For the reasons stated above, profit before tax increased by approximately 18.0%from Rs. 6,520.3 million in FY 2006 to Rs. 7,692.5 million in FY 2007.Taxes. Tax expenses increased by approximately 79.1% from Rs. 666.0 million in FY 2006 to Rs.1,192.7 million in FY 2007, primarily due to changes in rates of applicable taxes due to increased income.Income tax – current. Income tax – current increased by approximately 79.8% from Rs. 659.4million in FY 2006 to Rs. 1,185.5 million in FY 2007, due to increases in rates of applicable taxes due toincreased income.Fringe benefit tax – current. Fringe benefit tax – current increased by approximately 9.2% fromRs. 6.5 million in FY 2006 to Rs. 7.1 million in FY 2007, primarily due to increase in employee benefits.Wealth tax. Wealth tax stayed constant at Rs. 0.1 million between FY 2006 and FY 2007.140

Deferred tax. Deferred tax expense increased by approximately 20.8% from Rs. 535.3 million inFY 2006 to Rs. 646.4 million in FY 2007, primarily due to increased provisions being made in relation toallowable depreciation in accordance with CERC regulations and the income tax regulations.Profit after tax. For the reasons stated above, profit after tax increased by approximately 11.0 %from Rs. 5,854.3 million in FY 2006 to Rs. 6,499.8 million in FY 2007.Liquidity and Capital ResourcesOur primary liquidity needs have been to finance our operations, working capital needs, debt service andcapital expenditures. All of our cash and cash equivalents are held in Rupees. All of our revenues from ourcustomers are paid in Rupees and we buy foreign currency as and when required for the purposes of payingcertain capital expenditures and making payments of principal and interest on our foreign currencydenominated debt.Our accounts receivable collection cycle typically varies between 7 days and 60 days. We issue monthlyinvoices to our customers, typically within the first week of each month. Our customers are required to paythe full amount of such invoices within 60 days from the date of invoicing, and typically pay their invoiceswithin the stipulated time. A few of our customers have in the past delayed payment to us, and have beencharged late payment charges. In the event that the customer pays after the expiration of the 60-day period,a penalty of 1.25% per month is charged on the outstanding bill amount as late payment charges.We fund our operational and working capital requirements primarily through our operating cash flows andcash reserves and believe that we have sufficient liquidity to fund our current operations, planned capitalexpenditures and repayment of our indebtedness over the next 12 months.Nine monthsendedDecember 31, Year ended March 31,2009 2009 2008 2007 2006 2005Net cash provided by (used in) operating activities........ 12,889.8 15,291.7 16,458.6 18,747.5 9,414.7 8,920.6Net cash provided by (used in) investing activities ........ (2,562.7) (6,247.0) (4,602.4) (2,560.8) (1,523.7) (882.4)Net cash provided by (used in) financing activities........ (8,170.0) (3,266.3) (11,130.6) (11,309.8) (9,985.2) (5,436.7)Net cash and cash equivalents at period end................... 14,871.5 12,714.4 6,936.0 6,210.4 1,333.5 3,427.7Net Cash Provided From (Used in) Operating ActivitiesNet cash provided from (used in) operating activities includes funds generated from our operating activitiesand payments made with respect to operating expenses such as wage and salary expenses for ouremployees, payments made to suppliers and contractors.In the nine months ended December 31, 2009, our net cash from operating activities was Rs. 12,889.8million, attributable primarily to cash received from our customers for sales of electricity of approximatelyRs. 15,038.4 million, as offset by payments for maintenance expenses of Rs. 199.6 million, and employeewages, salaries and administrative expenses of Rs. 897.8 million.In the year ended March 31, 2009, our net cash from operating activities was Rs. 15,291.7 million,consisting primarily of cash received from our customers for sales of electricity of approximately Rs.14,908.6 million, as offset by payments for maintenance expenses of Rs. 390.3 million, and employeewages, salaries and administrative expenses of Rs. 1,383.6 million.In the year ended March 31, 2008, our net cash from operating activities was Rs. 16,458.6 million,consisting primarily of cash received from our customers for sales of electricity of approximately Rs.12,047.0 million, as offset by payments for maintenance expenses of Rs. 373.7 million, and employeewages, salaries and administrative expenses of Rs. 1,124.6 million.In the year ended March 31, 2007, our net cash from operating activities was Rs. 18,747.5 million,consisting primarily of cash received from our customers for sales of electricity of approximately Rs.141

18,875.9 million, as offset by payments for maintenance expenses of Rs. 478.4 million, and employeewages, salaries and administrative expenses of Rs. 904.9 million.Net Cash Provided From (Used in) Investing ActivitiesNet cash provided (used in) from investing activities includes funds generated from our investing activitiessuch as interest income on our cash deposits and operating accounts and cash outflows from our capitalexpenditures on fixed assets, construction in progress, capital work advances and spare and replacementparts for our plant, machinery and equipment.In the nine months ended December 31, 2009, our net cash used in investing activities was Rs. 2,562.7million, attributable primarily to capital expenditures comprising approximately Rs. 1,725.1 million for theconstruction of the Rampur Project and survey and investigation works on other projects, Rs. 475.2 millionfor acquisitions of fixed assets, plant and machinery and Rs. 362.4 million as advances for capital works.In the year ended March 31, 2009, our net cash used in investing activities was Rs. 6,247.0 million,consisting primarily of capital expenditures comprising approximately Rs. 3,082.1 million for theconstruction of the Rampur Project and survey and investigation works on other projects, Rs. 2,220.5million for acquisitions of fixed assets, plant and machinery and Rs. 944.4 million as advances for capitalworks.In the year ended March 31, 2008, our net cash used in investing activities was Rs. 4,602.4 million,consisting primarily of capital expenditures comprising approximately Rs. 895.7 million for theconstruction of the Rampur Project and survey and investigation works on other projects, Rs. 3,264.7million for acquisitions of fixed assets, plant and machinery and Rs. 442.0 million as advances for capitalworks.In the year ended March 31, 2007, our net cash used in investing activities was Rs. 2,560.8 million,consisting primarily of capital expenditures comprising approximately Rs. 701.4 million for theconstruction of the Rampur Project and survey and investigation works on other projects, Rs. 1,893.6million for acquisitions of fixed assets, plant and machinery and Rs. 34.2 million as advances for capitalworks.Net Cash Provided From (Used In) Financing ActivitiesNet cash provided from (used in) financing activities includes cash inflows and outflows from ourincurrence of short-term borrowings and related charges such as interest and bank administration expenses,as well as payments of dividends to our shareholders.In the nine months ended December 31, 2009, our net cash used in financing activities was Rs. 8,170.0million, attributable primarily to principal repayments on outstanding loan obligations of Rs. 3,558.6million, interest payments of Rs. 1,218.5 million and dividend payments (including payments relating totaxes chargeable on dividend payments) of Rs. 3,392.9 million.In the year ended March 31, 2009, our net cash used in financing activities was Rs. 3,266.3 million,consisting primarily of principal repayments on outstanding loan obligations of Rs. 1,223.6 million, interestpayments of Rs. 1,939.5 million and dividend payments (including payments relating to taxes chargeable ondividend payments) of Rs. 2,550.4 million.In the year ended March 31, 2008, our net cash used in financing activities was Rs. 11,130.6 million,consisting primarily of principal repayments on outstanding loan obligations of Rs. 5,354.9 million, interestpayments of Rs. 2,215.2 million and dividend payments (including payments relating to taxes chargeable ondividend payments) of Rs. 3,560.5 million.In the year ended March 31, 2007, our net cash used in financing activities was Rs. 11,309.8 million,consisting primarily of principal repayments on outstanding loan obligations of Rs. 5,791.2 million, interestpayments of Rs. 2,940.5 million and dividend payments (including payments relating to taxes chargeable ondividend payments) of Rs. 2,578.1 million.Off-Balance Sheet Arrangements and Financial Instruments142

We have no off-balance sheet arrangements.Capital ExpendituresOur capital expenditures consist primarily of survey and investigation costs, feasibility studies, projectdevelopment costs for the construction of our hydroelectric power projects, as well as for the upgrading ofexisting plant, machinery and equipment currently in use at the NJHPS. Our aggregate capital expendituresfor the financial years ended March 31, 2005, 2006, 2007, 2008 and 2009 amounted to approximately Rs.922.8 million, Rs. 218.9 million, Rs. 2,523.6 million, Rs. 3,964.8 million, Rs. 5,753.6 million, respectivelyas well as aggregate capital expenditure for the nine months ended December 31, 2009 of Rs. 2,591.5million.Going forward, we may adjust our capital expenditure plans based on our future results of operations, cashflows and overall financial condition, as well as considerations such as financing costs, the condition offinancial markets, the Indian economy and the Indian energy industry in general, the availability of vendoror other financing on terms acceptable to us, technical or other problems in obtaining or installingequipment, changes in our business plans and strategies and changes in the exchange rates between the U.S.dollar and the Rupee. Our capital expenditures are generally subject to the receipt of necessary approvalsfrom the Government and state governments. For details on regulations governing us please see sectiontitled “Regulations and Policies in India” on page 87.Contractual Obligations and CommitmentsThe following table summarizes our payment obligations and commitments as of December 31, 2009:Total(Rs. million)Payment due by period endNot longerthan 1 year 1 to 5 years > 5 years(Rs. in mn)Short-term bank and other loans........................................ 19.8 19.8 – –Long-term bank and other loans ........................................ 17,698.8 3,106.4 10.752.4 3,840.0Finance lease obligations ................................................... – – – –Trade payables .................................................................. 3,789.9 2,635.8 1,146.1 –Operating lease commitments............................................ – – – –Purchase commitments ...................................................... 17.9 17.9 – –Other capital commitments ................................................ 10,923.9 2,437.2 8,486.7 –Total............................................................................... 32,450.3 8,217.2 20,385.2 3,840.0For a description of our material indebtedness, please see section titled “Financial Indebtedness” on page123.Contingent LiabilitiesThe following table summarizes certain contingent liabilities of our Company as of December 31, 2009:For the nine months endedDecember 31, 2009Particulars(Rs. million)1. Claims against company not acknowledged as Debt:(a) Capital Works ................................................................................................................. 5,429.7(b) Land Compensation........................................................................................................ 144.9(c) Disputed Service Tax Demand....................................................................................... 123.6(d) Others.............................................................................................................................. 2.0Sub-Total................................................................................................................................. 5,700.22. Estimated amount of contracts remaining to be executed on capital account (net of adv.)10,941.8not provided for:......................................................................................................................Total......................................................................................................................................... 16,642.0Quantitative and Qualitative Disclosures about Market Risk143

Our market risk is related principally to changes in foreign exchange rates and fluctuations in interest rates.The following discussions, constituting forward-looking statements, which involve risks and uncertainties,summarize our exposure to foreign exchange rates and interest rate movements and our policies to addressthese risks. We have implemented risk management methods to mitigate and control these and other marketrisks to which we are exposed. However, it is difficult to predict with accuracy changes in economic ormarket conditions and to anticipate the effects that such changes could have on our financial performanceand business operations.Foreign Exchange RatesOur foreign currency exposures give rise to market risk associated with exchange rate movements againstthe Rupee, which is our reporting currency. Gains or losses resulting from the settlement of foreigncurrency transactions and from the translation of foreign currency monetary assets and liabilities arerecognized in the income statement. These balances are translated at period end exchange rates. Our foreigncurrency denominated indebtedness as of December 31, 2009, which includes our short-term and long-termborrowings denominated in foreign currencies, accounted for 34.8% of our total indebtedness.We do not hedge our foreign currency exposures. However, any increase in our cost of borrowing isautomatically passed on to our customers under prevailing tariff regulations. For details on our foreigncurrency borrowings please refer to “Financial Indebtedness” on page 123.Interest Rate RiskWe may be subject to market risk due to fluctuations in interest rates. As at the date of this Red HerringProspectus, we have one foreign currency denominated loan which bears interest at a variable rate andexposes us to rate increases. Our outstanding indebtedness under this loan constitutes approximately 1.57%of our total borrowings. Increases in interest rates will increase the cost of new borrowings, and the interestrates with respect to our outstanding floating rate debt could have a material adverse effect on our financialposition. We do not currently hedge our interest rate exposure under our financial borrowings in foreigncurrency. However, any increase in our cost of borrowings due to fluctuations in interest rates isautomatically passed on to our customers as per the current tariff regulations. Please refer to “FinancialIndebtedness” on page 123 for details of our borrowings under floating interest rates.Significant Developments after December 31, 2009To our knowledge and except as disclosed herein, since the date of the last financial statements contained inthis Red Herring Prospectus, no circumstances have arisen which would materially and adversely affect, orwhich would be likely to affect, our operations, profitability, asset values or our ability to pay our materialliabilities in the next 12 months.Unusual or Infrequent Events or TransactionsTo our knowledge and except as disclosed herein, there have been no events or transactions that may bedescribed as “unusual” or “infrequent”.Significant economic changesTo our knowledge and except as disclosed herein, there are no significant economic changes that havematerially and adversely affected or are likely to have a material adverse effect on our income fromcontinuing operations.Known Trends or UncertaintiesTo our knowledge and except as disclosed herein, there are no trends or uncertainties that have or had or areexpected to have a material adverse impact on our income from continuing operations.Future correlations between Income and Expenditure144

To our knowledge and except as disclosed herein, there is no future relationship between expenditure andincome that will have a material adverse impact on the operations and finances of our Company.SeasonalityOur business is subject to seasonality. Electricity generated by our sole operational project, the NJHPS,depends on the available water supply from the Sutlej River located in the state of Himachal Pradesh. Wetypically generate most of our annual energy generation from the NJHPS during the monsoon season, whichtypically runs from June to September.Major CustomersSee “Business—Our Projects—The NJHPS—Power Purchase Agreements” on page 64 for adescription of our major customers for the NJHPS.Competitive ConditionsWe expect competition in the power industry from existing and potential competitors to intensify. Forfurther details regarding our competitive conditions and our main competitors, see the sections “RiskFactors” and “Our Business” beginning on pages xiii and 57, respectively.145

SECTION VI: LEGAL AND OTHER INFORMATIONOUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTSExcept as stated in the table below there are no outstanding litigations, suits, criminal or civil prosecutions,proceedings or tax liabilities against the Company and its Directors and there are no defaults, non-paymentof statutory dues, over-dues to banks/financial institutions, defaults against banks/financial institutions,defaults in creation of full security as per terms of issue/other liabilities, proceedings initiated foreconomic/civil/any other offences (including past cases where penalties may or may not have been imposedand irrespective of whether they are specified under paragraph (I) of Part 1 of Schedule XIII of theCompanies Act) other than an unclaimed liability of the Company and no disciplinary action has been takenby SEBI or any stock exchanges against the Company or Directors of the Company.I. Litigation involving the Company and contingent liabilities of the CompanyA. Contingent LiabilitiesDetails of contingent liabilities not provided for by our Company as on December 31, 2009 are providedbelow:ParticularsFor the nine months endedDecember 31, 2009(Rs. million)1. Claims against company not acknowledged as Debt:(a) Capital Works ................................................................................................................... 5,429.7(b) Land Compensation.......................................................................................................... 144.9(c) Disputed Service Tax Demand......................................................................................... 123.6(d) Others................................................................................................................................ 2.0Sub-Total................................................................................................................................... 5,700.22. Estimated amount of contracts remaining to be executed on capital account (net of adv.) not10,941.8provided for:..............................................................................................................................Total........................................................................................................................................... 16,642.0B. Pending Litigation against the CompanyI. Criminal Cases(Rs. in million)1. State of Himachal Pradesh has filed a Revision Petition (no. 6-S-10/2008) under Section 397 of theCode of Criminal Procedure, 1973, before the Additional District and Sessions Judge, Shimla, forsetting aside of the order passed by the Judicial Magistrate, Shimla on the ground that theproceeding initiated against the Company and the personnel of the Company under section 6 ofHimachal Pradesh Instrument (Control & Noises) Act, 1969 were wrongly and illegally droppedby the Judicial Magistrate. This Revision Petition is currently pending before the AdditionalDistrict and Sessions Judge and the next date of hearing is May 29, 2010.2. Laxman Singh and others filed a Criminal Complaint dated February 13, 2002 against theCompany and others under Section 133 of Code of Criminal Procedure, 1973 inter alia allegingthat the houses in the Nigulsari village were getting damaged as a result of wrong dumping ofmuck, improper drainage system and heavy blasting carried out by the Company for NJHEP.Taking suo motu notice of the Complaint, the Sub Divisional Magistrate, Nichar, Bhabanagarpassed an order against the Company directing the Company to inter alia take the responsibility ofshifting and resettling the affected families and to control the landslide in the village. Thereafterthe Company filed a Criminal Review Petition before the District and Sessions Judge, Shimla,Himachal Pradesh, which was dismissed. Further, the Company filed a Writ Petition before theHigh Court of Himachal Pradesh, wherein the High Court of Himachal Pradesh directed that theCompany be put in appearance before the Sub Divisional Magistrate, Nichar, Bhabanagar in termsof Section 135 (b) of the Code of Criminal Procedure, 1973. It was further directed by the HighCourt of Himachal Pradesh that upon appearance of the Company and cause having been shown,the Sub Divisional Magistrate, Nichar, Bhabanagar shall proceed with the matter strictly in146

accordance with the provisions contained in Chapter 10 B of the Code of Criminal Procedure,1973 and to pass a final order after giving the parties an opportunity to be heard keeping in viewthe jurisdictional parameters under Section 133 of the Code of Criminal Procedure, 1973. OnFebruary 27, 2006, the Company filed before the Sub Divisional Magistrate, Nichar, Bhabanagar,an application for dropping the proceedings initiated against it. Presently the matter is pendingbefore the Sub Divisional Magistrate, Nichar, Bhabanagar. The next date of hearing for the matteris to be listed in due course of time.3. A Criminal Case (No. 66 of 2007) under Section 336, 337, 304A of the Indian Penal Code, 1973 ispending against Mr. Davinder Wadhera, Additional General Manager of the Company in the Courtof Chief Judicial Magistrate, Kinnaur at Recong Peo. The charges in this case have been framed onthe basis of an FIR (No. 32/07) registered by the local police on the grounds of death of a labourwho was washed away due to alleged silt flushing conducted by the Company in the river nearChaura. Presently the case is pending before the Chief Judicial Magistrate, Kinnaur at Recong Peo.The next date of hearing for the matter is May 5, 2010.II.Civil CasesA. Cases pertaining to ContractsThe resolution of any dispute arising under our major civil contracts is governed by a mechanismto which either party i.e. the Company or the contractor may resort to. As per the said mechanism,the dispute, at first, can be resolved internally by referring the dispute to the CMD. If thecontractor is aggrieved by the decision, the said dispute is referred to the Dispute Review Board("DRB"). As per the arbitration agreement entered into by the contractor and the Company, thedecision of the DRB is binding on the Company and the contractor with respect to disputes whichinvolve individual claims up to Rs. 50,000,000. However, where the claims are above Rs.50,000,000, the Company or the contractors have an option to refer such dispute to the DRB forthe second time. In the event the Company or the Contractor is not satisfied with the decision ofthe DRB on the second evaluation, either party has the option of referring the said dispute forarbitration, within 30 days of it receiving the final decision of the DRB. The arbitration isconducted in accordance with the Arbitration Act if the contractor is an Indian party and the ICCrules if the Contractor is a foreign party.The outstanding disputes with respect to the major civil contracts have been classified on the basisof the projects to which they relate and are detailed as under.a. Cases relating to Nathpa Jhakri Hydro-electric Project ("NJHEP")(i)Contract for Construction of Civil Works for Dam, Intake and Desilting Arrangement("Contract for Dam, Intake and Desilting")1. Continental Foundation Joint Venture ("CFJV") has filed an Original Miscellaneous Petition (No.374 of 2009) before the Delhi High Court against the Arbitral Tribunal's award rendered in favourof the Company in relation to the claim raised by CFJV under the Contract for Dam, Intake andDesilting entered between the Company and CFJW, for reimbursement of un-recovered increase inthe minimum wages rate of local labour. The amount involved in the claim is Rs. 116,344,131. ThePetition is pending before the Delhi High Court and the next date of hearing for the petition is May24, 2010. An agreement dated March 31, 2010 has been executed between the parties forsettlement of this claim. As per the agreement this claim shall be deemed to have been satisfied intotality and neither of the parties will be left with any claim in relation to these proceedings.Further, the said petition will also be withdrawn as per the agreement.(ii) Contract for construction of civil works for Head Race Tunnel from Stn. 0 m to Stn. 16042 mincluding Sholding works ("Contract for HRT Works")1. CFJV filed an Original Miscellaneous Petition (No. 375 of 2009) in the Delhi High Court againstthe Arbitral Tribunal's award rendered in favour of the Company in relation to the claim raised byCFJV under the Contract for HRT Works entered between the Company and CFJW, forreimbursement of un-recovered increase in the minimum wages rate of local labour. The amountinvolved in this claim is Rs. 97,556,109. The Petition is pending before the Delhi High Court and147

the next date of hearing for the petition is May 24, 2010. An agreement dated March 31, 2010 hasbeen executed between the parties for settlement of this claim. As per the agreement this claimshall be deemed to have been satisfied in totality and neither of the parties will be left with anyclaim in relation to these proceedings. Further, the said petition will also be withdrawn as per theagreement.(iii)Contract for construction of civil works for Head Race Tunnel from Stn. 16042 m to Stn.27295 m including Surge Shaft ("Contract for HRT and Surge Shaft")1. Nathpa Jhakri Joint Venture ("NJJV") filed an Original Miscellaneous Petition (No. 490 of 2009)before the Delhi High Court against the Arbitral Tribunal's award in relation to the claim raised byNathpa Jhakri Joint Venture ("NJJV") under the Contract for HRT and Surge Shaft enteredbetween the Company and NJJV, for reimbursement of un-recovered increase in the minimumwages rate of local labour. The amount involved in this claim is Rs. 39,978,532. The Petition ispending before the Delhi High Court and the next date of hearing for the petition is May 24, 2010.2. NJJV approached the Arbitral Tribunal for setting aside of DRB's award in relation to a disputethat arose between the Company and NJJV under the Contract for HRT and Surge Shaft signedbetween them. The amount involved in this claim is Rs. 70,000,000 excluding interest. This matteris presently pending before the Arbitral Tribunal and the next date of hearing will be notified indue course of time.(iv)Contract for construction of civil works for Pressure Shaft and Power House Complex("Contract for Pressure Shaft")1. M/s Jaiprakash Hyundai Consortium ("JHC") has raised a claim before the Dispute Review Board("DRB") for payment of additional expenditure incurred by JHC in completing the work under theContract for Pressure Shaft entered between the Company and JHC, as a result of subsequentlegislation having an effect of imposing additional costs on JHC in form of (i) tax on certain goodscarried by road in Himachal Pradesh, (ii) additional goods tax and (iii) Himachal Pradesh WorksContract Tax and (iv) fees paid towards obtaining consent to establish under the relevant statelegislations for mining. The amount involved in the claim is Rs. 4,258,999 and the interestaccrued. Presently, the matter is pending before the DRB. The next date of hearing for the matterwill be notified in due course of time.2. JHC has raised a claim under the Contract for Pressure Shaft entered between the Company andJHC before DRB for (i) payment of additional cost incurred in completing the works related to theNJHEP because of delay caused by interruptions, shut-down, break down and voltage fluctuationsin primary source of power provided by the Company i.e. the costs due to loss of productivity and(ii) extension of time for completion of the work under the Contract. The amount involved in theclaim is Rs. 204,105,852 along with any escalation and the interest accrued. The DRB has directedJHC to club this claim with the other claims made by JHC against the Company.3. JHC has raised a claim under the Contract for Pressure Shaft entered between the Company andJHC, before DRB claiming payments for the restoration work done by it on the instructions of theCompany, as a result of the flooding of the power house complex consequent to the unprecedentedflood on August 1, 2000 in river Sutlej. The restoration work involved (i) removal of silt depositedin the outfall pit and (ii) other restoration works for the NJHEP power house and TRC complex.The claimant made two separate claims of Rs. 579,325 for removal of silt deposited in the outfallpit and Rs. 53,360,040 for other restoration works along with any escalation and the interestaccrued. The hearing on the matter has been concluded and the decision of the DRB is awaited.4. JHC had raised a claim under the Contract for Pressure Shaft entered between the Company andJHC, before DRB claiming payment of Rs. 1,418,200,000 towards productivity losses, interest etc.The matter is presently pending with the DRB and the next date of hearing is will be notified indue course of time.b. Cases relating to Rampur Hydro-electric Project ("RHEP")148

(i)Package-2 - Construction of Civil Works of HRT Stn.12900 m to Stn. 15088, Surge Shaft,Pressure Shaft, Valve House Complex, TRT, Adits and Hydro-Mechanical works ("Contractfor Hydro Mechanical Works and Others")1. M/s Patel-Gammon Joint Venture ("PGJV") has raised 20 (twenty) claims under the Contract forhydro Mechanical Works and Others, before DRB. The sum total of all the claims by PGJVagainst the Company totals to Rs. 1,870,064,608 (approximately).c. Other cases pertaining to Contracts1. M/s Techno Electric and Engineering Company has filed an Appeal before the Division Bench ofthe High Court of Himachal Pradesh against the order of the Hon'ble Single Judge of the HighCourt in Arbitration Petition (No. 30 of 2007) filed by the Company before the High Court ofHimachal Pradesh for setting aside the award of the Arbitral Tribunal wherein the ArbitralTribunal had passed an award in favour of the Contractor, in relation to the claims for damagesarising out of termination of the Letter of Award granted to it by the Company. The saidArbitration Petition was disposed of by the Hon'ble Single Judge of the High Court of HimachalPradesh by its order dated June 15, 2009, allowing an amount of Rs. 632,339 to the Contractoragainst an award of Rs. 4,802,357 plus 18% interest per annum, which was earlier passed in favourof the Contractor by the Arbitral Tribunal. The Company deposited an amount of Rs. 763,156 inthe Registry of the High Court of Himachal Pradesh on August 24, 2009 with up to date interest.The Appeal filed by the Contractor is pending before the Division Bench of the High Court and thenext date of hearing for the Appeal is yet to be listed.B. Service Matters1. A Civil Writ Petition (No. 1657 of 2009) was filed by Pooja Ratan against the Company before theHigh Court of Himachal Pradesh due to non selection in the HR department of the Companyagainst a vacant post in the said department, which the Company had advertised. The High Courthas passed an interim order dated June 1, 2009 stating that any selection made by the HRdepartment for the vacant post, during the pendency of the said petition will be subject to the finalorder of the High Court. Therefore, presently this petition is pending for final orders before theHigh Court of Himachal Pradesh and the next date of hearing for the petition is to be listed afterwinter vacations of HP High Court.2. Eight Petitions (OA No. 1686/92, OA No. 496/93, OA No. 1061/96, OA No. 501/97, OA No.1047/97, OA No. 1422/97, OA No. 1844/97, OA No. 750/97) have been filed against the Companybefore the High Court of Himachal Pradesh for repatriation of the petitioners to HPSEB. All thesematters are currently pending before the High Court of Himachal Pradesh and the next date ofhearing for the petitions is to be listed after winter vacations of HP High Court.C. Public Interest Litigation1. A writ petition (No. 0030 of 2064) in the nature of Public Interest Litigation has been filed byMadhav Kumar Basnet against the Company before the Supreme Court of Nepal for declaring thatthe procedure of the Government of Nepal to select the Company for producing, transmitting anddistributing electricity for ARUN III Project was unconstitutional and invalid on several groundsincluding the ground that the said project should have been awarded to a private company and nota public sector enterprise. Presently, the case is pending for adjudication before the Supreme Courtof Nepal. The next date of hearing for the petition is May 6, 2010.D. Cases relating to Land AcquisitionThere are 83 court proceedings filed with respect to the land acquired by the Company in relationto NJHPS. A majority of these proceedings relate to demands for enhanced compensation by theland owners. The details of these proceedings are as follows:1. Raj Kumar Rajinder Singh and others filed a Civil Suit (No. 253 of 1995) before the High Court ofHimachal Pradesh against the Company claiming that land measuring 411.12 Bighas should nothave been vested in favour of the State of Himachal Pradesh. The said parcel of land is unacquired149

land, possession of which has been transferred to the Company by Himachal Pradesh StateElectricity Board. The State of Himachal Pradesh has also been made party to the suit. Thefinancial implication in respect of this Civil Suit would come to an amount of Rs. 78,157,919. TheCivil Suit is pending before the High Court and the next date of hearing for the Civil Suit will benotified in due course of time.2. 37 Reference Petitions were filed by the land owners under Section 18 of the Land AcquisitionAct, 1996 before the District Judge, Kinnaur, Rampur for enhancement of compensation withrespect to structure on land owned by them, acquired by the Company for execution of the NJHEP.The District Judge Kinnaur, Rampur enhanced the compensation relating to structure on land inrespect of only one petitioner, Charan Das in which a sum of Rs. 584,689 has already beendeposited by the Company in the High Court of Himachal Pradesh. In other 36 cases, the DistrictJudge Kinnaur, Rampur has not allowed enhancement in compensation relating to structure onland and accordingly the interest holders have preferred Regular First Appeals before the HighCourt of Himachal Pradesh. The Appeals are presently pending before the High Court of HimachalPradesh. The total financial implication in respect of all these cases would be approximately Rs.46.5 Million.3. There are 2 apportionment cases pending before High Court of Himachal Pradesh and DistrictJudge, Kinnaur. There is a civil suit (No. 16 of 1999) in relation to apportionment of compensationpending before the District Judge, Kinnaur, Rampur, which deals with an inter-se disputeregarding the shares of the interest holders and there is an Appeal (FAO 202 of 1994) underSection 30 of the Workmen's Compensation Act against the award of the Workmen'sCompensation Commissioner dated April 25, 1994 whereby the claim of the Appellant wasrejected by the Commissioner. The said appeal is pending before the District Judge, Kinnaur,Rampur and the issue arising in this case is whether the Appellant, mother of the deceased, whowas an employee of the Company is entitled to apportionment of the compensation, the deceasedwas entitled to under the said Act. The financial liability in respect of these cases has already beendischarged as the Company has deposited the due amount of compensation.4. There are 2 land reference cases (no. 114-R/04/95/92 and 29-R/04/95/92) filed before the Court ofDistrict Judge, Kinnaur, Rampur under Section 18 of the Land Acquisition Act, 1996 forenhancement of compensation awarded by the Land Acquisition Collector in respect of the landacquired by the Company for execution of the NJHEP. The total financial implication in respect ofthese cases would not exceed Rs. 1.8 Million (approx.). These cases are presently pending beforethe Court of District Judge and the next date of hearing in each of these cases is April 20, 2010 andApril 27, 2010 respectively.5. There are 41 Reference Petitions filed against the Company before the District Court at Rampur,Bushar under Section 18 of the Land Acquisition Act, 1996 for enhancement of compensation inrespect of the land acquired by the Company for execution for RHEP. Our Company has alreadydeposited the amount of compensation awarded by the Land Acquisition Collector in all thesecases amounting to Rs. 198,063,150. The net financial implication in respect of all these caseswould be Rs. 485,648,450. The petitions are presently pending before the District Court.E. Other Civil Cases1. A Civil Suit (No. 773 of 2007) has been filed by V. K. Mittal against the Company before the HighCourt of Delhi claiming the possession of the property rented to the Company and recovery ofdamages/ mesne profits. V.K. Mittal has alleged that the Company being a tenant in the premisesowned by him failed to vacate the said premises despite several reminders including a letter datedDecember 20, 2006. The amount involved in this suit is Rs. 2,281,360. Presently the Civil Suit ispending before the Delhi High Court and the next date of hearing for the matter is April 20, 2010.2. There are two Civil Suits filed against the Company before the High Court of Himachal Pradeshby various parties claiming compensation for the loss caused to their land and the structuresthereon on account of blasting carried out by the Company in relation to NJHEP. Presently theCivil Suits are pending before the High Court of Himachal Pradesh and the next date of hearing ineach of these Civil Suits will be notified in due course of time.150

3. Three Civil Suits (Nos. 35/1, 36/1 and 37/1 of 2008) have been filed by M/s Kundan Lal Hari Rambefore the High Court of Himachal Pradesh against the Company before the Civil Judge, SeniorDivision, Shimla, for declaring the penalty imposed by the Company on account of delay inexecution of works awarded to M/s Kundan Lal Hari Ram by the Company in relation to theNJHEP, as illegal, arbitrary and void. Total financial implication in respect of these cases againstthe Company comes to Rs. 71,254. Presently, these Civil Suits are pending before the High Courtof Himachal Pradesh and the next date of hearing will be notified in due course of time.4. Abhishek Rai filed a Civil Writ Petition (No. 1105 of 2007) before the High Court of HimachalPradesh with a prayer that no mega commercial project in District Kullu shall use sand and gravel(Bazri) which has been procured from District Kullu. A stay order dated July 26, 2007 was passedby the High Court to the effect that no mega commercial project in District Kullu shall use sandand gravel (Bazri) which has been procured from District Kullu. The Company was not party tothe writ petition but subsequently, as the major part of the Rampur Hydro-electric Project comesunder District Kullu, the Company filed an application dated August 5, 2007, for becoming a partyto the Writ Petition which was allowed. Another application for modification/ vacation of the stayorder was filed. Consequently, the stay order dated July 26, 2007 was modified to the extent thatthe Company shall procure sand and gravel from the duly authorised persons, who are registeredwith the Department of Industries. The Civil Writ Petition is pending before the High Court ofHimachal Pradesh and the next date of hearing will be notified in due course of time.5. A Regular First Appeal (No. 343 of 2005) has been filed by Mr. C.L. Sharma, a contractor, againstthe order of the Civil Judge, Senior Division, Shimla rendered in a suit for recovery filed by theappellant for the recovery of arrears of rent amounting to Rs. 398,180 from the Company. The saidsuit for recovery was decided in favour of the Company by the Civil Judge, Senior Division,Shimla and the Company was held liable only for the payment of Rs. -8,500 as arrears of rentagainst the amount claimed by the appellant. The matter is presently pending before the Districtand Sessions Judge, Shimla and the next date of hearing for the matter is May 22, 2010.6. Sanu Ram filed a Civil Suit (no. 11/1 of 2009) before the Court of Civil Judge (Senior Division),Karsog Camp at Anni District, Himachal Pradesh seeking a permanent prohibitory injunctionagainst the Company to restrain the Company from constructing any road or raising anysuperstructure and uprooting/ damaging the Safeda trees over the land owned by him. The suit ispending before the Court and the next date of hearing for the matter will be notified in due courseof time.C. Litigation by the CompanyI. Civil CasesA. Cases pertaining to ContractsThe resolution of any dispute arising under our major civil contracts is governed by a mechanismto which either party i.e. the Company or the contractor may resort to. As per the said mechanism,the dispute, at first, can be resolved internally by referring the dispute to the CMD. If thecontractor is aggrieved by the decision, the said dispute is referred to the Dispute Review Board("DRB"). As per the arbitration agreement entered into by the contractor and the Company thedecision of the DRB is binding on the Company and the contractor with respect to disputes whichinvolve individual claims up to Rs. 50,000,000. However, where the claims are above Rs.50,000,000, the Company or the contractors have an option to refer such dispute to the DRB forthe second time. In the event the Company or the Contractor is not satisfied with the decision ofthe DRB on the second evaluation, either party has the option of referring the said dispute forarbitration, within 30 days of it receiving the final decision of the DRB. The arbitration isconducted in accordance with the Arbitration Act if the contractor is an Indian party and the ICCrules if the Contractor is a foreign party.The outstanding disputes with respect to the major civil contracts have been classified on the basisof the projects to which they relate and are detailed as under.Cases relating to NJHEP151

a. Cases pertaining to NJHEP(i)Contract for construction of Civil Works for Dam, Intake and Desilting Arrangement("Contract for Dam")1. The Company has filed a Civil Suit (No. 67 of 2005) before the High Court of Himachal Pradeshfor setting aside of DRB's award in relation to a dispute arising between the Company and CFJVunder the Contract for Dam signed between them. CFJV filed a claim before the DRB claimingreimbursement of alleged additional cost incurred by it as a result of non availability of accessalong the right bank of the river to the DT Baching plant. It was alleged by CFJV that it was theexclusive responsibility of the Company to provide such access as per the terms of the Contract forDam. The DRB passed an award in favour of CFJV. Dissatisfied with the award the Companyfiled the aforesaid Civil Suit. In the said Civil Suit, a written statement was filed by CFJV and areplication to the written statement has been filed by the Company. The amount involved in thisCivil Suit is Rs. 5,939,600 excluding interest. This Civil Suit was returned by the High Court ofHimachal Pradesh, for lack of jurisdiction and the Company was directed to file the suit freshbefore the High Court of Delhi (Civil Suit No. of 2009). Accordingly, the suit in relation to thesaid dispute was filed before the High Court of Delhi and is presently pending before the DelhiHigh Court and the next date of hearing is July 9, 2010. An agreement dated March 31, 2010 hasbeen executed between the parties for settlement of this claim. As per the agreement this claimshall be deemed to have been satisfied in totality and neither of the parties will be left with anyclaim in relation to these proceedings. Further, the said Civil Suit will also be withdrawn as per theagreement.2. The Company has filed a Civil Suit (No. 786 of 2009) before the High Court of Delhi for settingaside of DRB's award in relation to a dispute arising between the Company and CFJV under theContract of Dam signed between them. CFJV filed a claim before the DRB claiming: (a) Servicetax on Insurance Premium (b) Overhead charges on road barrier tax and on service tax oninsurance premium (c) Interest on (a) and (b) (for the period up to August 31, 1996) in relation tothe NJHEP. The DRB passed an award in favour of CFJV. Dissatisfied with the award theCompany filed the aforesaid Civil Suit. In the said Civil Suit, a written statement was filed byCFJV and a replication to the written statement has been filed by the Company. The amountinvolved in this Civil Suit is Rs. 6,198,523 excluding interest. This Civil Suit was returned by theHigh Court of Himachal Pradesh, for lack of jurisdiction and the Company was directed to file thesuit fresh before the High Court of Delhi. Accordingly, the suit in relation to the said dispute wasfiled before the High Court of Delhi and is presently pending before the Delhi High Court and thenext date of hearing is April 19, 2010. An agreement dated March 31, 2010 has been executedbetween the parties for settlement of this claim. As per the agreement this claim shall be deemed tohave been satisfied in totality and neither of the parties will be left with any claim in relation tothese proceedings. Further, the said Civil Suit will also be withdrawn as per the agreement.3. The Company has filed an Original Miscellaneous Petition (No. 128 of 2009), before the HighCourt of Delhi for setting aside of the award passed by the Arbitral Tribunal in relation to a disputearising between the Company and CFJV under the Contract for Dam signed between them. CFJVfiled a claim before the Arbitral Tribunal in respect of running costs of DG set incurred by it incompleting the works under the Contract for Dam on account Company's failure to provide powerfacilities at the NJHEP site. The Arbitral Tribunal passed an award in favour of CFJV. Dissatisfiedwith the award the Company filed the aforesaid petition. The amount involved in this Petition isRs. 74,686,114 excluding interest. This Civil Suit was returned by the High Court of HimachalPradesh, for lack of jurisdiction and the Company was directed to file the suit fresh before theHigh Court of Delhi. Accordingly, the suit in relation to the said dispute was filed before the HighCourt of Delhi and is presently pending before the Delhi High Court and the next date of hearing isJuly 16, 2010. An agreement dated March 31, 2010 has been executed between the parties forsettlement of this claim. As per the agreement this claim shall be deemed to have been satisfied intotality and neither of the parties will be left with any claim in relation to these proceedings.Further, the said petition will also be withdrawn as per the agreement.152

(ii) Contract for Construction of civil works for Head Race Tunnel from Stn. 0 m to Stn. 16042m including Sholding works ("Contract for HRT")1. The Company has filed a Civil Suit (No. 884 of 2009) before the High Court of Delhi for settingaside of DRB's award in relation to a dispute arising between the Company and CFJV under theContract for HRT signed between them. CFJV filed a claim before the DRB claiming (a) servicetax on insurance premium (b) overhead charges on road barrier tax and on service tax on insurancepremium (c) Interest on (a) and (b) (for the period up to August 31, 1996). The DRB passed anaward in favour of CFJV. Dissatisfied with the award the Company filed the aforesaid Civil Suit.A Written Statement was filed by CFJV and a Replication to the written statement was filed by theCompany. The amount involved in this civil suit is Rs 11,434,445 excluding interest. The CivilSuit is presently pending before the Delhi High Court and the next date of hearing is April 19,2010. An agreement dated March 31, 2010 has been executed between the parties for settlement ofthis claim. As per the agreement this claim shall be deemed to have been satisfied in totality andneither of the parties will be left with any claim in relation to these proceedings. Further, the saidCivil Suit will also be withdrawn as per the agreement.2. The Company has filed a Civil Suit (No. 46 of 2002) before the High Court of Delhi for settingaside of DRB's award in relation to a dispute arising between the Company and CFJV under theContract for HRT signed between them. CFJV filed a claim before the DRB claimingreimbursement of additional costs for haulage of muck incurred due to unforeseen increase in boththe load and lift of the Wadhal approach site. The DRB passed an award in favour of CFJV.Dissatisfied with the award the Company filed the aforesaid Civil Suit. The amount involved inthis civil suit is Rs 1,738,291 excluding interest. The suit was returned by the Hon'ble High Courtof HP for lack of territorial jurisdiction and the same has been filed before the Hon’ble Delhi HighCourt. The date of first hearing will be notified in due course of time. An agreement dated March31, 2010 has been executed between the parties for settlement of this claim. As per the agreementthis claim shall be deemed to have been satisfied in totality and neither of the parties will be leftwith any claim in relation to these proceedings. Further, the said Civil Suit will also be withdrawnas per the agreement.3. The Company filed an Original Miscellaneous Petition (No. 183 of 2009) under Section 34 of theArbitration and Conciliation Act, 1996, before the High Court of Delhi, against the award of theArbitral Tribunal dated August 2, 2007, granted in favour of CFJV, in respect of the claim of theCompany for reimbursement of the running cost of the generators. The Company was required torun generators because of excessive power shut down and low voltage supply. The amountinvolved in this civil suit is Rs 95,192,233 excluding interest. This petition is presently pendingbefore the Delhi High Court and the next date of hearing is July 16, 2010. An agreement datedMarch 31, 2010 has been executed between the parties for settlement of this claim. As per theagreement this claim shall be deemed to have been satisfied in totality and neither of the partieswill be left with any claim in relation to these proceedings. Further, the said petition will also bewithdrawn as per the agreement.4. The Company filed an Arbitration Petition (No. 58 of 2003) before the High Court of HimachalPradesh under Section 34 of the Arbitration and Conciliation Act, 1996 against Arbitral Tribunal'saward dated January 16, 2002, granted in favour of CFJV, in respect of the claim of admissibilityof 1% discount on the quoted rates by the contractor. The amount involved in this Petition is Rs.90,282,569 excluding interest. The matter is reserved for judgment. An agreement dated March 31,2010 has been executed between the parties for settlement of this claim. As per the agreement thisclaim shall be deemed to have been satisfied in totality and neither of the parties will be left withany claim in relation to these proceedings. Further, the said petition will also be withdrawn as perthe agreement.5. The Company has filed an Original Miscellaneous Petition (No. 97 of 2010), before the Delhi HighCourt for the setting aside of a decision of the Arbitral Tribunal in favour of CFJV in relation toextension of time and cost compensation claimed by CFJV. The contract provided for completionof all relevant work on September 26, 1998. The work was not completed until June 9, 2003resulting in a delay of 59.3 months. Accordingly, CFJV raised a claim for extension of time andcost compensation for the extended period (ie. the duration of the delay). The Arbitral Tribunalgranted an award in favour of CFJV for approximately Rs. 730 million inclusive of interest. The153

next hearing is scheduled to take place on August 16, 2010. An agreement dated March 31, 2010has been executed between the parties for settlement of this claim. As per the agreement this claimshall be deemed to have been satisfied in totality and neither of the parties will be left with anyclaim in relation to these proceedings. Further, the said petition will also be withdrawn as per theagreement.(iii)Contract for Construction of civil works for Head Race Tunnel from Stn. 16042 m to Stn.27295 m including Surge Shaft ("Contract for Head Race Tunnel and Surge Shaft")1. The Company has filed a Civil Suit (No. 1278 of 2009) before the High Court of Delhi for settingaside of DRB's award in relation to a dispute arising between the Company and NJJV under theContract for Head Race Tunnel and Surge Shaft signed between them. NJJV filed a claim beforethe DRB claiming damages arising out of increase of drilling time due to unforeseen appearance ofquartzite hard rock, in the excavation of the tunnel as part of the NJHEP. The DRB passed anaward in favour of NJJV. Dissatisfied with the award the Company filed the aforesaid Civil Suit.The amount involved in this Civil Suit is Rs. 23,087,522 excluding interest. This civil suit ispresently pending before the Delhi High Court and the next date of hearing is July 6, 2010.2. The Company has filed a Civil Suit (No. 1277 of 2009) before the High Court of Delhi for settingaside of DRB's award in relation to a dispute arising between the Company and NJJV under theContract for Head Race Tunnel and Surge Shaft signed between them. NJJV filed a claim beforethe DRB claiming refund of alleged excess recovery of electricity bills recovered by the Companyfrom NJJV. The DRB passed an award in favour of NJJV. Dissatisfied with the award theCompany filed the aforesaid Civil Suit. The amount involved in this Civil Suit is Rs. 8,529,374excluding interest. This Civil Suit is presently pending before the Delhi High Court and the nextdate of hearing is July 6, 2010.3. The Company has filed a Civil Suit (No. 56 of 2004) before the High Court of Himachal Pradeshfor setting aside of DRB's award in relation to a dispute arising between the Company and NJJVunder the Contract for Head Race Tunnel and Surge Shaft signed between them. NJJV filed aclaim before the DRB in respect of application of a new method of excavation called ‘TemporaryDress Methodology' for completing the NJHEP, which was not envisaged in the Contract. NJJVclaimed higher rates for the work done as the excavation could not be done as per the technicalspecifications, bill of quantities, tender drawings and general conditions of the Contract for HeadRace Tunnel because of an extraordinary geological occurrence. The DRB passed an award infavour of NJJV. Dissatisfied with the award the Company filed the aforesaid Civil Suit. Theamount involved in this civil suit is Rs. 3,182,293 excluding interest. The Hon’ble High Court ofHimachal Pradesh vide its order dated 16.09.09 directed that suit to be refiled before the hon'blehigh court of Delhi being the court of competent jurisdiction. The same is under process.4. The Company has filed an appeal No, RFA 12/10 before the Division Bench of the Delhi Highagainst the order of the High Court of Delhi wherein the Hon’ble High Court dismissed the CivilSuit (No. 525 of 2009) before the High Court of Delhi for setting aside of DRB's award in relationto a dispute arising between the Company and NJJV under the Contract for Head Race Tunnel andSurge Shaft signed between them. NJJV filed a claim before the DRB claiming a waiver ofrecovery of interest by the Company, on the deferred contractual advances which were on accountof the contractual problems and related financial constraints. The DRB passed an award in favourof NJJV. Dissatisfied with the award the Company filed the aforesaid Civil Suit. The amountinvolved in this Civil Suit is Rs. 48,636,869 excluding interest. The next date of hearing is April21, 2010.5. The Company has filed a Original Miscellaneous Petition (No. 714 of 2009) before the High Courtof Delhi for setting aside of Appellate Tribunal's award in relation to a dispute arising between theCompany and NJJV under the Contract for Head Race Tunnel and Surge Shaft signed betweenthem. Thereafter NJJV filed a claim before the DRB claiming payment on account of the loss ofproductivity because of the flash floods at Mangland. The Appellate Tribunal passed an award infavour of NJJV. Dissatisfied with the award the Company filed the aforesaid Original154

Miscellaneous Petition. The amount involved in this Original Miscellaneous Petition is Rs.120000,000. This Original Miscellaneous Petition is presently pending before the Delhi HighCourt and the next date of hearing is July 20, 2010.6. The Company has approached the Arbitral Tribunal for setting aside of DRB's award in relation toa dispute that arose between the Company and NJJV under the Contract for Head Race Tunnel andSurge Shaft signed between them. The claim of NJJV before the DRB was in respect of paymentfor rock reconstruction i.e. additional excavation, loading and backfilling with concrete, carried outin the Head Race Tunnel on the instructions of the engineer in charge, for the last 3 yearsamounting to Rs. 83,006,721 excluding interest. This matter is presently pending before theArbitral Tribunal and the next date of hearing will be notified in due course of time.7. The Company has approached the Arbitral Tribunal for setting aside of DRB's award in relation toa dispute that arose between the Company and NJJV under the Contract for Head Race Tunnel andSurge Shaft signed between them. NJJV claimed before the DRB that there existed an agreement,which was reached during the pre bid meeting, that the custom duty on import of steel plateswould be considered at 25%. However, the Company claimed that the prevailing rate of customsduty at that point in time would prevail i.e. 30%. DRB passed an award in favour of NJJV. Theamount involved in the claim is Rs. 72,381,760 excluding interest. This matter is presently pendingbefore the Arbitral Tribunal and the next date of hearing will be notified in due course of time.(iv)Contract for Construction of civil works for Pressure Shaft and Power House Complex("Contract for Pressure Shaft")1. The Company has filed a Civil Suit (No. 105/1 of 2005) before the Civil Judge (Senior Division),Shimla, Himachal Pradesh for setting aside of DRB's award in relation to a dispute arising betweenthe Company and M/s Jaiprakash Hyundai Consortium ("JHC") under the Contract for PressureShaft signed between them. JHC filed a claim before the DRB claiming that work done by themnamely construction and demolition of concrete plug at the exit end of tail race tunnel was anadditional work, in addition to the work stipulated in the Contract for Pressure Shaft and thereforeJHC is entitled to reimbursement of Rs 606,800. The DRB in its recommendation allowed JHC areimbursement for an amount of Rs 304,300. Dissatisfied with the award the Company filed theaforesaid Civil Suit. This Civil Suit is presently pending before the Civil Judge (Senior Division),Shimla, Himachal Pradesh and the next date of hearing is April 24 2010.2. The Company has filed a Civil Suit (No. 1708 of 2008) before the High Court of Delhi for settingaside of DRB's award in relation to a dispute arising between the Company and JHC under theContract for Pressure Shaft signed between them. JHC filed a claim before the DRB claimingreimbursement of extra cost for generating power by DG sets for fulfilling its obligations under theContract for Pressure Shaft. The amount involved in this Civil Suit is Rs. 18,310,703. This CivilSuit is presently pending before the Delhi High Court and the next date of hearing is May 21,2010.3. The Company has filed an Original Miscellaneous Petition (No. 222 of 2008) before the HighCourt of Delhi under Section 34 of the Arbitration and Conciliation Act, 1996, for setting aside ofArbitral Tribunal's award in relation to a dispute arising between the Company and JHC under theContract for Pressure Shaft signed between them. JHC filed a claim before the DRB claimingreimbursement of extra cost incurred by it in relation to conversion of the electricity supplied to itby the Company, into the required voltage i.e. either the electricity had to be converted to hightension or to low tension. The DRB accepted the claim of JHC which was not acceptable to theCompany. Therefore, JHC referred the claim amounting to Rs. 27,195,687 plus interest beforeArbitral Tribunal for its adjudication and the Arbitral Tribunal awarded an amount of Rs.39,758,000 and future interest @ 16% (simple) p.a. in favour of JHC. Dissatisfied by the saidaward, the Company filed the aforesaid Original Miscellaneous Petition. This OriginalMiscellaneous Petition is presently pending before the Delhi High Court and has been put up forfinal hearing.4. The Company has filed an Original Miscellaneous Petition (No. 395 of 2009) before the HighCourt of Delhi under Section 34 of the Arbitration and Conciliation Act, 1996, for setting aside ofArbitral Tribunal's award in relation to a dispute arising between the Company and JHC under the155

Contract for Pressure Shaft signed between them. JHC filed a claim of Rs. 282,857,000 before theDRB claiming on account of its employees being entitled to higher wages by virtue of thenotification passed by the Government of Himachal Pradesh providing for the same. The DRBrejected the claim of JHC. Not satisfied with the decision of the DRB, JHC referred the claimamounting to Rs 660,300,000 before the Arbitral Tribunal. The Arbitral Tribunal passed an awardin favour of JHC for an amount of Rs. 552,700,000 plus future interest @ 16% per annum.Dissatisfied with the arbitral award, the Company filed the aforesaid Original MiscellaneousPetition. This Original Miscellaneous Petition is presently pending before the Delhi High Courtand the next date of hearing is July 19, 2010.5. The Company has filed a Civil Suit (No. 958 of 2009) before the High Court of Delhi for settingaside of DRB's award in relation to a dispute arising between the Company and JHC under theContract for Pressure Shaft signed between them. JHC filed a claim before the DRB claimingadditional payment for providing stiffener rings on the steel liner to give support to the steel liner.The claim of JHC is of an amount of Rs. 15,310,000 for the work done upto October 26, 1997along with escalation. The DRB gave its recommendations in favour of JHC but did not quantifythe amount of the said claim. Dissatisfied with the award the Company filed the aforesaid CivilSuit. For decree of declaration the present suit has been valued at Rs 4,777,890. This Civil Suit ispresently pending before the Delhi High Court and the next date of hearing is May 21, 2010.6. The Company has filed a Civil Suit (No. 1072 of 2009) before the High Court of Delhi for settingaside of DRB's award in relation to a dispute arising between the Company and JHC under theContract for Pressure Shaft signed between them. JHC filed a claim before the DRB claimingadditional payment for providing for the welding costs of the stiffener rings, to be attached to thesteel liner to give support to the steel liner. The claim of JHC is of an amount of Rs. 26,742,000 forthe work done from October 7, 1997 up to March 31, 1999 along with escalation and interest. DRBgave its initial observations and recommendations on August 6, 2005 and the final observationsand recommendation on November 21, 2006 in favour of the JHC in respect of additional paymentfor providing stiffener rings on Pressure Steel Liner as per revised welding seams period uptoMarch 31, 1999, amounting to Rs. 31,074,455 excluding interest. Dissatisfied with the award theCompany filed the aforesaid Civil Suit. This Civil Suit is presently pending before the Delhi HighCourt and the next date of hearing is May 21, 2010.7. The Company has approached the Arbitral Tribunal for setting aside of DRB's award in relation toa dispute that arose between the Company and JHC under the Contract for Power House Complex.Prior to referring the dispute to the arbitral tribunal our Company has raised a recovery of certainpayments made to JHC which was inadvertently paid. JHC contested the recovery amount raisedby our Company before the DRB. The DRB gave its recommendation in favour of JHC. TheCompany instituted arbitration proceedings on July 17, 2009, to challenge the aforesaidrecommendations of the DRB and claimed that the sum of Rs. 137,820,984 paid to JHC by theCompany be refunded to the Company with an interest @18% p.a on the said amount. TheCompany has filed a claim statement as directed by the Arbitral Tribunal. This matter is pendingbefore the Arbitral Tribunal and the next date of hearing will be notified in due course of time.B. Other Cases pertaining to Contracts1. The Company has filed an Arbitration Petition (No. 54 of 2005) under Section 34 of theArbitration and Conciliation Act, 1996 before the High Court of Himachal Pradesh for settingaside of the award of the learned arbitrator dated May 30, 2005. The learned arbitrator had passedan award against the Company in relation to the payment to be made to Indo Power PlantConstruction Power Limited under a contract for performance of works for the NJHEP. The totalamount involved in this petition is approximately Rs 1,602,995. Aggrieved by the said award theCompany has filed the aforesaid application for setting aside of this award. The High Court ofHimachal Pradesh by its order dated March 9, 2010 noted that the finding of the Arbitral Tribunalwas contradictory. As a result, both parties shall appear before the Presiding Officer of theTribunal on the next date of hearing for the matter on April 19, 2010.C. Service Matters156

1. The Company filed Letter Patent Appeal before the High Court of Himachal Pradesh for settingaside of the judgement of High Court of Himachal Pradesh dated May 31, 2007 wherein theHon’ble court allowed the Civil Writ Petitions filed by Manmeet Gupta and R. M. Sharma,employees of the Company, claiming promotion in their jobs which had allegedly been postponedby the Company. The said Appeal is pending before the High Court of Himachal Pradesh and thenext date for hearing will be notified in due course of time.2. A Civil Suit (No. 22/1 of 2008) has been filed by the Company in the court of the Civil Judge(Junior Division), Shimla, for recovery of advance of Rs. 168,086 sanctioned to M.T. Reddy,(Personnel Officer, SJVN) who left the job without making the repayment of the said advance tothe Company. A written statement was filed by the defendant on June 10, 2008. The Civil Suit ispending before the Civil Judge and the next date of hearing in this matter will be notified in duecourse of time.3. The Company filed two Civil Suits (Nos. 1 of 1999 and 26 of 2005) against its employees beforethe Court of Civil Judge, Junior Division, Rampur, Shimla for recovery of certain amount duefrom them. In each of these Civil Suits, Civil Judge, Junior Division, Rampur, Shimla passedorders in the favour of the Company. Thereafter the Company filed execution petitions for theexecution of the above orders before the Civil Judge, Junior Division, Rampur, Shimla. However,the said execution petitions were transferred to the Court of Additional Chief Judicial Magistrate,Bhiwani, Jaipur and are presently pending and a sum of Rs. 31,250 is liable to be recovered. Thenext date of hearing in each of these Civil Suits will be notified in due course of time.D. Cases relating to land acquisitionThere are 10 court proceedings filed with respect to the land acquired by the Company in relationto various projects. A majority of these proceedings relate to demands for enhanced compensationby the land owners. The project wise details of these proceedings are as follows:1. There are 3 Special Leave Petitions filed by the Company for setting aside of the orders of theHigh Court of Himachal Pradesh wherein the Hon'ble High Court permitted the award of highercompensation to certain land owners whose lands had been acquired by the Company for theNJHEP. After the compensation for such acquisition was awarded by the Land AcquisitionCollector, the land owners being dissatisfied by the award sought reference under Section 18 of theLand Acquisition Act, 1996 claiming enhanced compensation. The District Judge (Forests) passedan order enhancing the compensation payable to the land owners. However, the land owners beingdissatisfied with the said order preferred Regular First Appeals before the High Court of HimachalPradesh. The High Court of Himachal Pradesh allowed the said appeals and passed orders infavour of the land owners. Aggrieved by the said orders of the High Court of Himachal Pradesh,the Company filed the said Special Leave Petitions in the Supreme Court of India which wereadmitted and notice issued. The appeals are still pending before the Supreme Court. The next dateof hearing for one of these appeals is July 3, 2010 and the hearing dates for the remaining twoclaims will be notified in due course of time.2. The Company has filed a Special Leave Petition (No. 1523 of 2003) before the Supreme Court ofIndia for setting aside of the order dated August 29, 2002 passed by the High Court of HimachalPradesh in Civil Miscellaneous Petition (No. 4 of 2002) wherein the Hon'ble High Court directedthe District Judge, Kinnaur, Rampur to release the amount of compensation due and the payable toDaulat Ram Negi. The said Special Leave Petition was admitted by the Supreme Court of India.Presently, the decision on the same is pending and the next date of hearing will be notified in duecourse of time3. The Company has filed a Special Leave Petition (No. 4234 of 2009) before the Supreme Court ofIndia for setting aside of the order passed by the High Court of Himachal Pradesh in LPA (No. 8 of2004) wherein the High Court held that Taul Dasi was entitled to the benefits of resettlement andrehabilitation scheme of the Company as her land had been acquired by the Company for NJHEP.The said Special Leave Petition was admitted by the Supreme Court of India. Presently, the157

decision on the same is pending and the next date of hearing for the matter will be notified in duecourse of time.The total amount involved in the above five proceedings mentioned in points 1, 2 and 3 above isapproximately Rs 7,728,800.4. The Company has filed a Special Leave Petition for setting aside of the judgment and order of theHigh Court of Himachal Pradesh dated July 3, 2008 which dismissed the appeal filed by theCompany and allowed the cross appeal filed by the land owners including Late Raj KumarRajinder Singh for enhancement of compensation in respect of the land acquired for the NJHEP.The Company has deposited the requisite amount of compensation in the High Court of HimachalPradesh. The amount involved in this matter is Rs 53,473,479. The petition is currently pendingadjudication before the Supreme Court. The next date of hearing for the petition will be notified indue course of time.5. There are four Appeals filed before the High Court of Himachal Pradesh by the Company againstthe orders of the District Judge, Kinnaur at Rampur awarding compensation to the land owners onaccount of blasting carried out by the Company in relation to the NJHEP. In each of these appeals,the Company has disputed the amount of compensation awarded to the land owners. Presently allthe Appeals are pending before the High Court of Himachal Pradesh and the next date of hearingin each of these appeals will be notified in due course of time.The amount involved in the above four proceedings and the two similar suits filed forcompensation from losses caused from blasting, as mentioned in point 2 of clause II E- “OtherCivil Cases” of this section on page 150, aggregates to approximately Rs 4,442,460E. Income Tax Litigations:1. Assessment year 2004-05Our Company has filed an appeal before the Commissioner of Income Tax (Appeals) against theassessment order of the Assessing Officer for the assessment year 2004-05 wherein the AssessingOfficer had disallowed the capitalization of certain expenses relating to wages etc. incurred by theCompany during the construction of the NJHEP. The hearing has been concluded and the orders ofthe Commissioner of Income Tax (Appeals) are awaited.2. Assessment year 2006-07Our Company has filed an appeal before the Commissioner of Income Tax (Appeals) against theassessment order of the Assessing Officer for the assessment year 2006-07 wherein the AssessingOfficer had disallowed capitalization of a certain amount of depreciation charged in the books ofaccounts of the Company and contingent unascertained liabilities such as leave encashment, postretirement medical benefit etc during the said assessment year. The hearing has been concludedand the orders of the Commissioner of Income Tax (Appeals) are awaited.3. Assessment Year 2007-08Our Company has filed an appeal before the Commissioner of Income Tax (Appeals) against theassessment order of the Assessing Officer for the assessment year 2007-08 wherein the AssessingOfficer had disallowed excess depreciation charged in the books of accounts of the Company andcontingent unascertained liabilities such as leave encashment, post retirement medical benefit etcduring the said assessment year. The first hearing on the matter is yet to take place.F. Service Tax Matters:1. The Commissioner, Central Excise, Chandigarh issued a show cause notice (C. No.V(STC)15/CE/ADJ/69/2008/8245) dated October 20, 2008 to the Company raising a demand ofservice tax amounting to Rs.133.32 million (including education cess and secondary and highereducation cess) along with interest and penalty. The demand has been raised on account of failureto deposit service tax on payments made in convertible foreign exchange to foreign consultants,158

contractors and experts located outside India. The Company replied to the said show cause noticevide its letter no.A-II/ST/2009/7201 dated January 14, 2009 wherein it admitted a service taxliability of Rs. 9.73 million and deposited the same to the credit of the government on January 16,2009. However, the Company disputed the service tax liability amounting to Rs.123.58 million onvarious grounds which inter alia include grounds such as certain payments were made for supplyof goods which is not chargeable to service tax, some payments were made for civil contracts anderection and commissioning services which were exempt from service tax in the relevant period,certain payment were made as advance to consultants for which tax would be paid on receipt ofservices and that certain amounts included in the demand have already been deposited by theCompany. The matter is currently pending and the next date of hearing will be notified in duecourse of time will be notified in due course of time.G. Proceedings initiated against our Company or its Directors for economic offencesThere are no proceedings initiated against our Company for any economic offences.The disclosures on outstanding litigation in respect of the Directors of the Company have beenrestricted to such litigation, actions, proceedings and notices etc. which are issued or pendingagainst the Directors in their personal capacity or in their capacity as the Directors of theCompany.Further, there are no outstanding litigation, actions, proceedings and notices etc. initiated against ofour Directors in their personal capacity or as a Director of our Company including litigation inrelation to economic offences.H. Details of past penalties imposed on our Company by the authorities concernedExcept as stated in this section, there are no past penalties imposed on our Company by theauthorities concerned.I. Potential Litigation against our CompanyExcept as stated in this section, there are no potential litigations against our Company that we arecurrently aware of or in connection with which, we have received notice.J. Adverse findings against our Company as regards compliance with the securities lawsThere are no adverse findings against our Company as regards compliance with the securities laws.K. Material Developments since the Last Balance Sheet DateExcept as disclosed in the section titled "Management's Discussion and Analysis of FinancialCondition and Results of Operations" on page 127, in the opinion of our Board, there have notarisen, since the date of the last financial statements disclosed in this Red Herring Prospectus, anycircumstances that materially or adversely affect or are likely to affect our profitability taken as awhole or the value of our consolidated assets or our ability to pay material liabilities within thenext 12 months.L. Outstanding dues to small scale undertaking(s) or any other creditorsThere are no outstanding dues above Rs. 0.1 million to small scale undertaking(s) or any othercreditors by our Company, for more than 30 days.M. Outstanding Litigation against other companies whose outcome could have an adverse effecton our CompanyExcept as disclosed in this section, there are no outstanding litigation, suits, criminal or civilprosecutions, statutory or legal proceedings including those for economic offences, tax liabilities,159

show cause notices or legal notices pending against any company whose outcome could have amaterial adverse effect on the position of our Company.N. Litigations against the Directors involving violation of statutory regulations or allegingcriminal offenceThe disclosures on outstanding litigation in respect of the Directors of the Company have beenrestricted to such litigation, actions, proceedings and notices etc. which are issued or pendingagainst the Directors in their personal capacity or in their capacity as the Directors of theCompany.Further, there are no litigation, actions, proceedings and notices etc. initiated against any of theDirectors either in a personal capacity or as a Director of our Company including the violation ofstatutory regulations or alleging criminal offence.O. Criminal/ civil prosecution against the Directors for any litigation towards tax liabilitiesThe disclosures on outstanding litigation in respect of the Directors of the Company have beenrestricted to such litigation, actions, proceedings and notices etc. which are issued or pendingagainst the Directors in their personal capacity or in their capacity as the Directors of theCompany.Further, there are no litigations, actions, proceedings and notices etc. initiated against any of theDirectors either in a personal capacity or as a Director of our Company including criminal/ civilprosecutions for any litigation towards tax liabilities.160

GOVERNMENT AND OTHER APPROVALSIn view of the approvals listed below, we can undertake the Offer and our current business activities and nofurther major approvals from any governmental or regulatory authority or any other entity are required toundertake the Offer or continue our business activities. Unless otherwise stated, these approvals are all validas on the date of this Red Herring Prospectus. For further details in connection with the regulatory and legalframework within which we operate in India, see section titled “Regulations and Policies in India” onpage 87.A. APPROVALS FOR THE OFFERCorporate ApprovalsOur Board of Directors has, pursuant to resolutions passed at its meeting held on April 13, 2010, noted theapproval for disinvestment by the MoP.Further, our Board of Directors has, pursuant to resolutions passed at its meeting held on April 13, 2010,authorised our Company to take necessary action for filing of this Red Herring Prospectus with SEBI in linewith the decision taken earlier by the Board of Directors in its meeting.Approvals from the MoPThe MoP has through letter dated April 13, 2010 bearing No. 23/24/2009-H-II granted approval for thedisinvestment of 415,000,000 Equity Shares of our Company amounting to approximately 10.03% of theGoI shareholding in our Company.In-principle approvals from BSE and NSEWe have received in-principle approvals from the BSE and the NSE for the listing of our Equity Sharespursuant to letters dated March 11, 2010 and March 12, 2010, respectively.NSE is the Designated Stock Exchange.FIPB and RBI ApprovalThe FIPB through its letter bearing no. 6\23\2010 – FJU dated April 13, 2010 has clarified that no FIPBapproval is required for the transfer of the Equity Shares to non resident investors. Further, the RBI vide itsletter dated April 15, 2010 and bearing no. FE.CO.FID.No.- /10.21.185/2009-10 has confirmed that it hasno objection to the transfer of 415,000,000 Equity Shares by the President of India, acting through theMinistry of Power, Government of IndiaB. APPROVALS FOR PROJECTSI. OPERATIONAL PROJECTNathpa Jhakri Hydro-electric ProjectS No. Description Ref./LicenseNo.Issue dateExpirydateAuthoritygrantingapprovalEntity to whomapprovalgranted1. Environmental clearance No. 3/60/79 –HCT/Div.June 261980N.AGOI,Department ofScience andTechnologyCompany2. Approval for the diversion of forest land No. 8-369/85– Fry (Conn)July 81986N.AGOI,Department ofEnvironment,Forests andWildlifeCompany161

S No. Description Ref./LicenseNo.Issue dateExpirydateAuthoritygrantingapprovalEntity to whomapprovalgranted3. CCEA Approval for installed capacity of1500 MW at an estimated cost of Rs.16780.2 millionNo. 22/15//98-HYDELMarch1989NADepartment ofPower,Ministry ofEnergyCompany4. Approval of GOI for execution of NJHPP(6 x 250 MW) at an estimated cost of Rs.16780.2 million at September, 1988 pricelevelNo. 22/15/77– HYDELApril 51989N.AGOI, Ministryof Energy,Department ofPowerCompany5. Approval by PIB No. 8/1/93 – D(B&N)May 51993N.A.Ministry ofPower, GoICompany6. Approval for the revised costs estimates No. 8/1/93 – D(B&N)7. Approval for revised costs estimate andthe commissioning of the project byMarch 20022/NJPC/1/97-PAC/142008 Approval of second revised costs estimate No.12/1/98 –Hydel. II (Vol.II)9 Approval of RCE – III of NJHEP of Rs.81,871.3 million by CEA excluding IDC13/38/2001-H-IIJune 241993November13 1997May 101999August 142007N.A GOI, MoP CompanyN.A GOI, CEA CompanyN.A GOI, MoP CompanyNA. MoP Company10. Consent to operate EPPCB /SJVN (NJPC)HEP- Shimla /2006-22381-82November25, 2006March H.P. State31, Environment2007 * Protection andPollutionControl BoardCompany* The consent to operate was renewed by the letter of H.P. State Environment Protection and Pollution Control Board dated April 3,2007 bearing no. 0030082 until March 31, 2009. However the Company has deposited the fee for further extension of the consent theacknowledgement of which is yet to be received.II.PROJECT UNDER CONSTRUCTIONRampur Hydro-electric ProjectSNo.Description Ref./License No. Issue date Expirydate1. Techno-EconomicClearance2/ HP/ 27/05- PAC/ 1161-882. PIB Clearance F.No. 22/10/2001- DO(SJVN)3. Clearance from CabinetCommittee on EconomicAffairs4. Approval for diversion offorest land by the MoEF5. Environmental Clearancefrom MoEF6. Clearance for possessionand use of explosives.December16 th 2005July 25200613/1/2006- H- II January 252007F. No. 8-114/2005-FC April 72006J-12011/ 94/2005- IA.I March 312006E/HQ/HP/22/98 (E44999) June 30,2008AuthoritygrantingapprovalEntity towhomapprovalgrantedN.A. GOI, CEA CompanyN.A. MoP, PIB CompanyN.A. MoP CompanyN.A.MoEF (FCDivision)CompanyN.A MoEF CompanyMarch 31,2012GOI, Ministry ofCommerce andIndustry,Petroleum andExplosivesSafetyOrganisationM/sGammonIndiaLimited162

SNo.Description Ref./License No. Issue date Expirydate7. Clearance for possessionand use of explosives.8. Certificate of registrationu/s 7 CLRA.9. Certificate of registrationu/s 7(3) of the Building andother Construction Workers(Regulation of Employmentand Conditions of Service)Act, 1996.10. Certificate of registrationu/s 7 CLRA in favour ofGammon Patel JointVenture.11. Certificate of registrationu/s 7(2) CLRA12. Application for renewal ofissue of licence u/s 7 CLRA13. Renewal of clearance forpossession of explosives14. Consent to establish underthe Water (Prevention andControl of Pollution) Act,1974 and Air (Preventionand Control of Pollution)Act, 198115. Approval for diversion ofadditional forest land by theMoEFE/HQ/HP/22/82 (E37881) March 17,2008L.O/K2//CLA/PE/56/07013-4LO/RMP/BLD and OCWAct 96/2009-246(R-09)/2009/ACH(HP)L.O.(P)RMP/CLA/PE/5/94-2005-22May 302007November6, 2009November,30, 2009February2, 2005L.O.42/CLA/424/07 April 162009E/HQ/HP/22/58(E27587) May 52009EPPCB/Rampur HEP-(SJVNL)- Shimla/2006-23581/-87December13, 2006F. N0. 8-114/2005 – FC May 282009March 31,2012March 312011December12, 2007*AuthoritygrantingapprovalGOI, Ministry ofCommerce andIndustry,Petroleum andExplosivesSafetyOrganisationGoHP, LabourDepartmentGoHP, Office ofthe RegisteringOfficerGOI, Ministry ofLabour andEmployment,Office of theRegisteringOfficer andAssistant LabourCommissionerGoHP, LabourDepartmentOffice of theLabourOfficer/LicensingOfficerGOI, Ministry ofCommerce andIndustry,Petroleum andExplosivesSafetyOrganisationHP StateEnvironmentProtection andPollution ControlBoardMoEF (FCDivision)Entity towhomapprovalgrantedM/s AppleValleyDevelopersCompanyCompanyCompanyCompanyM/s PatelEngineeringLimitedCompanyCompanyCompany* The application dated June 19, 2009 bearing no. SJVNL:RHEP:DGM (Envt.)/ DB-6/2009-429-30 for the renewal of the consent toestablish for FY 2010 has been made to the HP State Environment Protection and Pollution Control Board.163

III.APPROVALS FOR PROJECTS AWAITING CLEARANCESDhaulasidh Hydro Electric ProjectS No. Description Ref./License No. IssuedateExpirydateAuthority grantingapprovalEntity towhomapprovalgranted1. Pre-Environmental clearance –prior permission for preconstructionactivities from EIAauthority, Himachal Pradesh,MoEF.HPSEIAA/ F (35)SJVN DhaulasidhHEP/ 2008- 1460-467Oct.03,2009NAMoEF, State LevelEnvironment ImpactAssessmentAuthorityCompany164

IV.APPROVALS FOR PROJECTS UNDER SURVEY AND INVESTIGATIONLuhri Hydro Electric ProjectS No. Description Ref./License No. Issuedate1. Geological Survey of India(“GSI”) Clearance2. NoC from Department ofIrrigation and PublicHealth **3. NoC from WildlifeDepartment ***4. NoC from the Directorate ofFisheries5. Registration under subsection (2) of Section 7 ofCLRA6. Registration under subsection (3) of Section 7 ofthe Building and OtherConstruction Work(RegistrationofEmployment and Conditionsof Service) Act, 1966 andthe Rules made thereunder(“Building Act andRules”).2677/01/LHIM/DPR/GSI/NDIPH-SE-WS-SNR-NOC/2008-33347-51WL (Misc.)-60/HEPs/Vol.III/4907FSH-F (2)-39/2008-ARC-XL.O(RMP)CLA/PE/REC/2009-52O(SML)Bld/Const/3/09December17, 2009November19, 2008December10, 2008December10, 2009December21, 2009November7, 2009ExpirydateAuthoritygrantingapprovalEntity towhomapprovalgrantedN.A Director, GSI Company *N.AN.A.N.A.N.A.N.A.SuprintendingEngineer,Irrigation &PH Circle,Sundernagar,HimachalPradeshPrincipalChiefConservatorof Forests,Wildlife cumChiefWildlifeWarden,HimachalPradesh,Shimla.Director cumWarden ofFisheriesRegistering/licensingOfficer cumLabourofficer,Departmentof Labour,GoHP.RegisteringOfficer underthe BuildingAct and RulesCompanyCompanyCompanyCompany ****Company ****** the approval was granted subject to certain conditions and addressed to the Director (PAC), CEA.** the approval is subject to certain conditions.*** the NoC was granted as the area proposed for setting up the project did not fall within the boundaries of national parks or wildlifesanctuaries.**** the registration is granted in respect of infrastructure works, construction of dam and tunnelling etc. for a maximum number of400 employees to be employed on any day by the employer.***** the registration is granted for a maximum number of 400 employees to be employed on any day by the employer.Naitwar Mori Hydro Electric ProjectS No. Description Ref./LicenseNo.1. Clearance for pre-constructionactivities by MoEF2. Approval of Detailed ProjectReportJ-12011/38/2007-IA.1421/I(2)/2010-04(8)/76/2005IssuedateJuly 122007March02, 2010ExpirydateAuthoritygrantingapprovalEntity to whomapproval grantedN.A MoEF CompanyN.A. GoU Company165

Jhakol Sankri Hydro Electric ProjectS No. Description Ref./LicenseNo.1. Clearance for pre-constructionactivities by MoEFJ-12011/83/2007- IA.1IssuedateJuly 15,2009ExpirydateAuthority grantingapprovalEntity to whomapproval grantedN.A MoEF (FC Division) CompanyDevsari HEPS No. Description Ref./LicenseNo.1. Stage 1 Clearance – for Surveyand Investigation2. Clearance for pre-constructionactivitiesJ-12011/1/2006- IA.1J-12011/92/2007- IA.1IssuedateMay 52006April 252008ExpirydateAuthority grantingapprovalEntity to whomapproval grantedN.A MoEF CompanyN.A MoEF CompanyArun III HEPS No. Description Ref./LicenseNo.IssuedateExpirydateAuthority grantingapprovalEntity to whomapproval granted1. Determination of project ascommercially viable11/10/2010/HP&I(1)/74February23, 2010N.AGOI, CEA, HydroPlanning &InvestigationDivisionCompanyIV.APPROVALS APPLIED FOR AND PENDINGRampur Hydro Electric ProjectNo licenses or approvals required for the current stage of the Rampur Hydro Electric Project remainoutstanding. Once the construction stage of the project has been completed, further licenses or approvalsmay be required.Naitwar Mori Hydro Electric ProjectSr.No.ApprovalApproving/ LicensingAuthorityDescription1.Environmental ClearanceUttarakhand EnvironmentProtection and PollutionControl Board (the“UPCB”)By way of letter dated February 11, 2009 (“Letter”), theCompany submitted the EIA/ EMP report and otherdocuments to UPCB .In the Letter, the Company requestedUPCB to conduct a public hearing for grant of environmentclearance.166

Sr.No.ApprovalApproving/ LicensingAuthorityDescription2. CAT Plan Office Chief WildlifeWarden (the “CWLW”) 4. CAT Plan of the catchment area was submitted toDirector, Rajaji National Park, Dehradun byDeputy Director , Govind Wild Life Sanctuary,National Park Purola, Uttarkashi on November20, 2009;5. The CAT Plan was further submitted to ChiefForest Conservator (Wild Life)/ CWLW byDirector, Rajaji National Park, Dehradun onDecember 26, 2009 for necessary action; and.6. The CAT Plan was further submitted by CWLWon December 31, 2009 to Chief ForestConservator, Uttarakhand for his approval whichis presently pending.3. Land Acquisition(ii)Diversion ofForest Land4. Approval for MagazineLicense under Explosive Rules1983Chief Controller ofExplosive, Petroleum andExplosive SafetyOrganisation (“ChiefController”).4. Forest conservator (Yamuna circle), Uttarakhand,submitted the case files pertaining to grant oflease of forest land admeasuring 32.002 Hectaresto the Company for 30 years, to Nodal Officercum-ChiefConservator of Forests on 16.09.09 fortaking necessary action.5. Further by way of letter dated December 30,2009, the Company submitted five copies of thefact sheet related to aforesaid lease to NodalOfficer-cum-Chief Conservator of Forests.6. Application dated July 21, 2009 made to theDivisional Forest Officer, Tons ForestDepartment, Purola, Uttarkashi, Uttarakhand, fordiversion of forest land admeasuring 7.88Hectares and situated in Banol, Nasna and BhaslaBlocks of River Tons, for mining purposes.Application dated February 1, 2010 bearing reference no.SJVN/GM/D.dun/10-719 has been made by the Company tothe Chief Controller for grant of explosive license forinstallation of permanent explosive magazine at Jakhyani.Jhakol Sankri Hydro Electric ProjectSr.No.ApprovalApproving/LicensingAuthorityDescription1. CEA clearance of DPR CEA The DPR is under preparation.2. Explosive license Chief Controller ofExplosive,Petroleum andExplosive SafetyOrganisation3. Diversion of forest land Divisional ForestOfficer (“DFO”)Identification of land is under process. We are proposing tomake the application to Controller of Explosives/Licensesonce the land is identified.Identification of land required for the Project is underprocess. We are proposing to make the application toconcerned DFO after the land is identified.4. Pre Environmental Clearance MoEF Application dated October 16, 2007 bearing reference no.SJVN/ BD&MS/ Uttarakhand/ JSHEP/2007/ has beenmade by the Company to the Additional Director, MoEFfor grant of pre environment clearance which is presentlypending.167

Sr.No.ApprovalApproving/LicensingAuthority5. Wildlife clearance Department ofForests, GoU6. Consent to Establish and Consent toOperate under Water (Prevention andControl of Pollution) Act 1974 and theAir (Prevention and Control ofPollution) Act 1981 and HazardousWastes Management RulesMoEFDescriptionApplication dated November 10, 2008, bearing referenceno. SJVN/BD&L/DDUN/JSHEP (WL) 08- 200-05 hasbeen made by the Company to the Chief Conservator ofForests and Chief Wildlife Warden, GoU for grant ofwildlife clearance which is presently pending.We are proposing to make the application after the grant ofenvironment clearance.Devsari Hydro Electric ProjectSr.No.ApprovalApproving/Licensing AuthorityDescription1. CEA clearance of DPR CEA DPR was submitted to CEA for clearance by way of letterdated January 14, 2009 bearing reference no.CC/CP/UKD/2008-2706, and the same is pending clearance.2. Environment and PollutionClearanceUttarakhandEnvironmentProtection andPollution ControlBoard, Dehradun(“UPCB”)By way of letter dated August 31, 2009, bearing referenceno. SJVN/DHEP/DGM/09-1725 (“Letter”), the Companysubmitted the draft EIA/ EMP reports to UPCB. In theLetter, the Company requested UPCB to conduct a publichearing in order to enable the Company to submit the finalEIA/ EMP report to MoEF for grant of environmentclearance.3. Diversion of forest land Divisional ForestOfficer, BadrinathForest Division,Gopeshwar (“DFO”)Application dated August 31, 2009 bearing reference no.DGM/DHIP-1802A, was made to DFO, Badrinath ForestDivision, Gopeshwar, for diversion of forest land admeasuring211.58 Hectares.4. Mining clearance from StateMining DepartmentState MiningDepartment, GoHPThe quarries have been identified. The samples from proposedquarries have been delivered to Central Soil and MaterialResearch Station, Ministry of Water Resources, GoI(“CSMRS”) on June 12, 2009. The final report from CSMRSis awaited. The application for mining clearances shall beprocessed after receipt of final report.5. Consent to Establish and Consentto Operate under Water(Prevention and Control ofPollution) Act 1974 and the Air(Prevention and Control ofPollution) Act 1981 and HazardousWastes Management RulesMoEFWe are proposing to file the applications for grant of consentto establish and consent to operate.Luhri Hydro Electric ProjectSr.No.Approval1. Submission of DPR for TEC/concurrence of CEA.Approving/LicensingAuthorityCEADescriptionDPR has been submitted to the CEA on November 10 2008, forTEC and is under process.168

Sr.No.ApprovalApproving/LicensingAuthorityDescription2.(ii)Diversion ofForest LandDivisional Forestofficer (“DFO”) 1. Application dated January 30, 2008 bearing no.LHEP/R&R/LAD/L-9/08-6676-84 has been made to the DFO,Shimla, District Shimla for diversion of 33.4 Hectares of land;2. Application dated January 29, 2008 bearing no.LHEP/R&R/LAD/L-9/08-6638-46 has been made to the DFO, Anni,At Luhri, District Kullu, Himachal Pradesh for diversion of 42.36Hectares of land;3. Application dated January 29, 2008 bearing no.LHEP/R&R/LAD/L-9/08-6648-56 has been made to the DFO,Rampur, District Shimla, Himachal Pradesh for diversion of 33.95Hectares of land;4. Application dated January 30, 2008 bearing no.LHEP/R&R/LAD/L-9/08-6658-66 has been made to the DFO,Karsog, District Mandi, Himachal Pradesh for diversion of 65.64Hectares of land.5. Application dated January 30, 2008 bearing no.LHEP/R&R/LAD/L-9/08-6667-75 has been made to the DFO,Kotgarh, District Shimla, Himachal Pradesh for diversion of 7.86Hectares of land.Dhaulasidh Hydro Electric ProjectSr.No.Approval1. Submission ofFSR.Approving/ LicensingAuthorityDepartment of MPP andPower, GoHPDescriptionFSR was submitted to GoHP on August 31, 2009.2. Diversion ofForest LandDivisional Forest Officer,Palampur, District Kangra(H.P.) (“Divisional ForestOfficer”)Application dated January 22, 2010 bearing no.SJ/DSHEP/SM/Const./2010/21-23, has been made to the Divisional ForestOfficer for deputation of their representatives to assist the Company incounting the trees and the completion of other formalities for diversion offorest land.3. Registrationunder theCLRALabour Officer, Bilaspur,District Bilaspur,Himachal PradeshApplication dated January 1, 2010 bearing no. DSHEP/P&A/2010-540/1made to Labour Officer for registration under CLRA.V. Miscellaneous approvals for our businessWe require various approvals for us to carry on our business in India. The approvals that we require includethe following:Description Issuing Authority Issued infavour ofRef./License No.IssuedateExpiryDate1. Registration under the CST/ GST ActAssessing Authority,Rampur Distt Shimla,Himachal PradeshGM, SJVNL,JhakriSIM CST 3543 & SIMIII / 5252January16, 1992NA2. Certificate of Registration(General/VATRegistration) as a Dealer /Person under Section 14(1)&(2) of HP VAT Act2005Assessing Authority,Rampur Distt Shimla,Himachal PradeshM/s RampurHydro ElectricProjectSIM III 10592 July 11,2006NA169

Description Issuing Authority Issued infavour of3. Central Sales TaxRegistration – Certificateof Registration as Dealerunder Section 7 (1) and 7(2) under the CST Act19564. Allotment of Service taxCode Number5. Central Sales TaxRegistration – Certificateof Registration as Dealerunder Section 7 (1) and 7(2) under the CST Act19566. Certificate of Registration(General/VATRegistration) as a Dealer /Person under Section 14(1)&(2) of HP VAT Act20057. Permanent AccountNumber8. Tax Deduction AccountNo.9. Licence for theOccupational Health andSafety ManagementSystems Certification10. Licence for theEnvironmentalManagement SystemsCertificationAssessing Authority,Rampur Distt Shimla,Himachal PradeshDeputy Commissionerof Central Excise,ShimlaAssessing Authority,Rampur Distt Shimla,Himachal PradeshAssessing Authority,Rampur Distt Shimla,Himachal PradeshDepartment of IncomeTax, GoIDepartment of IncomeTax, GoIBureau of IndianStandardsBureau of IndianStandardsM/s RampurHydro ElectricProjectRef./License No.IssuedateSIM CST 7564 July 11,2006SJVNL AAACN0861HST001 July 29,2004M/s SJVNL(Luhri HydroElectricProject)M/s SJVNL(Luhri HydroElectricProject)SIM CST 7400SIM III 10331March13, 2006March13, 2006SJVNL AAICS1307F May 24,1988ExpiryDateNANANANANASJVNL PTLS13839A NAM/s SJVNL(RampurHydro ElectricProject)M/s SJVNL(RampurHydro ElectricProject)9000132 March31, 20099000302 March31, 2009March30, 2012March20, 2012We have obtained the above approvals for our commissioned projects and our offices at various locations inIndia and the same are valid as of the date of filing of this Red Herring Prospectus.170

Authority for the OfferOTHER REGULATORY AND STATUTORY DISCLOSURESThe MoP has through its letter no. 23/24/2009–H–II dated April 13, 2010 granted approval for thedisinvestment of 415,000,000 Equity Shares (i.e. 10.03% of the paid up capital of the Company) throughthe Offer. The letter dated April 13, 2010 has been noted by our Board in its meeting held on April 13,2010.Further, our Board of Directors has, pursuant to resolutions passed at its meeting held on April 13, 2010,authorised our Company to take necessary action for filing of this Red Herring Prospectus with SEBI in linewith the decision taken earlier by the Board of Directors its meetings. Further, the Board has approved thisRed Herring Prospectus through its resolution dated April 13, 2010.We have obtained all necessary governmental, regulatory consents and approvals and have received allnecessary contractual consents required for the Offer. The FIPB through its letter bearing no. 6\23\2010-FJU dated April 13, 2010 has clarified that no FIPB approval is required for the transfer of the EquityShares to non resident investors. Further, the RBI vide its letter dated April 15, 2010 and bearing no.FE.CO.FID.No.- /10.21.185/2009-10 has confirmed that it has no objection to the transfer of 415,000,000Equity Shares by the President of India, acting through the Ministry of Power, Government of India Forfurther details regarding the requirement for the said approval and other ancillary matters in this regard, seesections titled “Regulations and Policies in India” and “Offer Procedure” on pages 87 and 191,respectively.Approvals from LendersThe BNP Paribas Bank has, through letter dated February 17, 2010 granted its consent for the change in theshareholding of our Company in respect of the Offer.Prohibition by SEBI, RBI or governmental authoritiesOur Company, our Directors, our Promoter, and the companies with which our Directors are associatedwith as directors, have not been prohibited from accessing or operating in capital markets or restrained frombuying, selling or dealing in securities under any order or direction passed by SEBI or any other authorities.None of our Promoters, Directors was or also is a promoter, director or person in control of any othercompany which is debarred from accessing the capital market under any order or directions made by theSEBI.Our Directors are not in any manner associated with the securities market and there has been no actiontaken by the SEBI against the Directors or any entity our Directors are involved in as promoters ordirectors.Neither our Company, our Promoters, nor our Directors have been declared as a wilful defaulter by the RBIor any other governmental authority and there are no violations of securities laws committed by any of themin the past and no such proceedings are currently pending against any of them.Eligibility for the OfferWe are eligible for the Offer as per Regulation 26 (1) of the SEBI ICDR Regulations as:• We have net tangible assets of at least Rs. 30 million in each of the preceding three full years (of12 months each), of which not more than 50% is held in monetary assets;• We have a pre-Offer net worth of not less than Rs. 10 million in each of the three preceding fullyears;• We have a track record of distributable profits as per Section 205 of Companies Act for at leastthree out of immediately preceding five years;171

• We have changed our name within the last one year, however, the change in the name of ourCompany does not indicate any change in the business activity of our Company.• The Offer size of up to Rs. [●] million along with all previous issues of equity shares made in thesame financial year aggregates to Rs. [●] million. The said aggregate, i.e., Rs. [●] million, does notexceed five times the pre-Offer net worth as per the last audited accounts for Fiscal 2009 which isRs. [●] million as per the Restated Financial Statements.Our Company’s net profit, dividend, net worth, net tangible assets and monetary assets for the last fiveyears from Fiscal 2005 through Fiscal 2009 based on our Restated Financial Statements, are set forthbelow:As per our Restated Financial Statements(Rs. in million)Particulars FY 2009 FY 2008 FY 2007 FY 2006 FY 2005Distributable Profits (1)23,421.2 18,682.9 14,243.1 9,561.3 5,336.6Dividends Paid3,200.0 2,440.0 2,350.0 1,594.3 1,431.6Net Worth (2)60,765.0 56,916.4 52,601.6 48,831.4 44,795.1Net Tangible assets (3) 103,112.9 94,444.6 90,465.9 89,178.5 86,215.4Monetary assets (4)12,714.4 6,936.0 6,210.4 1,333.5 3,427.7Monetary assets as a percentage of the net tangible assets 12.3% 7.3% 6.9% 1.5% 4.0%(1) Distributable profits’ have been defined in terms of Section 205 of the Companies Act.(2) ‘Net worth’ has been defined as the aggregate of equity share capital and reserves, excluding preference share redemption reserveand miscellaneous expenditures, if any.(3) ‘Net tangible assets’ means the sum of all net assets of the Company excluding intangible assets as defined in Accounting Standard26 issued by Institute of Chartered Accountants of India.(4) Monetary assets comprise of cash and bank balances and public deposit accounts with the Government.For further information, see section titled “Financial Information” on page F-1.Further, in accordance with Regulation 26 (4) of the SEBI ICDR Regulations, we shall ensure that thenumber of Allottees, i.e. persons to whom the Equity Shares will be allotted under the Offer shall be notless than 1,000; otherwise, the entire application money will be refunded forthwith. If such money is notrepaid within eight days after the Selling Shareholder becomes liable to repay it (i.e., from the date ofrefusal or within 15 days from the date of Bid/Offer Closing Date, whichever is earlier), then the SellingShareholder shall, on and from expiry of eight days, be liable to repay the money, with interest at the rate of15% per annum on application money, as prescribed under Section 73 of the Companies Act.DisclaimerAS REQUIRED, A COPY OF THE DRAFT RED HERRING PROSPECTUS HAS BEENSUBMITTED TO SEBI. IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OFTHE DRAFT RED HERRING PROSPECTUS TO SEBI SHOULD NOT, IN ANY WAY, BEDEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BYSEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIALSOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE OFFER IS PROPOSEDTO BE MADE OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONSEXPRESSED IN THE DRAFT RED HERRING PROSPECTUS. THE BOOK RUNNING LEADMANAGERS, JM FINANCIAL CONSULTANTS PRIVATE LIMITED, IDBI CAPITAL MARKETSERVICES LIMITED, IDFC CAPITAL LIMITED, SBI CAPITAL MARKETS LIMITED HAVECERTIFIED THAT THE DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUSARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI (ISSUE OFCAPITAL AND DISCLOSURE) REGULATIONS, 2009 AS FOR THE TIME BEING IN FORCE.THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISIONFOR MAKING AN INVESTMENT IN THE PROPOSED OFFER.IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE OUR COMPANY AND THESELLING SHAREHOLDER ARE PRIMARILY RESPONSIBLE FOR THE CORRECTNESS,172

ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THE DRAFT REDHERRING PROSPECTUS, THE BOOK RUNNING LEAD MANAGERS ARE EXPECTED TOEXERCISE DUE DILIGENCE TO ENSURE THAT OUR COMPANY AND THE SELLINGSHAREHOLDER DISCHARGE THEIR RESPONSIBILITY ADEQUATELY IN THIS BEHALFAND TOWARDS THIS PURPOSE, THE BOOK RUNNING LEAD MANAGERS, JM FINANCIALCONSULTANTS PRIVATE LIMITED, IDBI CAPITAL MARKET SERVICES LIMITED, IDFCCAPITAL LIMITED, SBI CAPITAL MARKETS LIMITED HAVE FURNISHED TO SEBI, A DUEDILIGENCE CERTIFICATE DATED FEBRUARY 26, 2010 IN ACCORDANCE WITH THE SEBI(MERCHANT BANKERS) REGULATIONS, 1992 WHICH READS AS FOLLOWS:“(1) WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TOLITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITHCOLLABORATORS, ETC. AND OTHER MATERIAL IN CONNECTION WITH THEDRAFT RED HERRING PROSPECTUS ) PERTAINING TO THE SAID OFFER;(2) ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THECOMPANY, ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, ANDINDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTSOF THE OFFER, PRICE JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTSAND OTHER PAPERS FURNISHED BY THE COMPANY, WE CONFIRM THAT:(a) THE DRAFT RED HERRING PROSPECTUS FILED WITH THE SEBI IS INCONFORMITY WITH THE DOCUMENTS, MATERIALS AND PAPERS RELEVANTTO THE OFFER;(b) ALL THE LEGAL REQUIREMENTS RELATING TO THE OFFER AS ALSO THEREGULATIONS GUIDELINES, INSTRUCTIONS, ETC. FRAMED/ISSUED BY THESEBI, THE CENTRAL GOVERNMENT AND ANY OTHER COMPETENTAUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH; AND(c) THE DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUS ARETRUE, FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELLINFORMED DECISION AS TO THE INVESTMENT IN THE PROPOSED OFFER ANDSUCH DISCLOSURES ARE IN ACCORDANCE WITH THE REQUIREMENTS OFTHE COMPANIES ACT, 1956, THE SECURITIES AND EXCHANGE BOARD OFINDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS,2009 AND OTHER APPLICABLE LEGAL REQUIREMENTS.(3) WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMEDIN THE DRAFT RED HERRING PROSPECTUS ARE REGISTERED WITH THE SEBIAND THAT TILL DATE SUCH REGISTRATION IS VALID * .(4) WE HAVE SATISFIED OURSELVES ABOUT THE CAPABILITY OF THEUNDERWRITERS TO FULFIL THEIR UNDERWRITING COMMITMENTS.-NOTEDFOR COMPLIANCE(5) WE CERTIFY THAT WRITTEN CONSENT FROM PROMOTERS HAS BEENOBTAINED FOR INCLUSION OF THEIR SPECIFIED SECURITIES AS PART OFPROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN AND THE SPECIFIEDSECURITIES PROPOSED TO FORM PART OF PROMOTERS’ CONTRIBUTIONSUBJECT TO LOCK-IN SHALL NOT BE DISPOSED / SOLD / TRANSFERRED BYTHE PROMOTERS DURING THE PERIOD STARTING FROM THE DATE OFFILING THE DRAFT RED HERRING PROSPECTUS WITH THE SEBITILL THEDATE OF COMMENCEMENT OF LOCK-IN PERIOD AS STATED IN THE DRAFTRED HERRING PROSPECTUS/DRAFT PROSPECTUS.(6) WE CERTIFY THAT REGULATION 33 OF THE SECURITIES AND EXCHANGEBOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS)173

REGULATIONS, 2009, WHICH RELATES TO SPECIFIED SECURITIES INELIGIBLEFOR COMPUTATION OF PROMOTERS CONTRIBUTION, HAS BEEN DULYCOMPLIED WITH AND APPROPRIATE DISCLOSURES AS TO COMPLIANCEWITH THE SAID REGULATION HAVE BEEN MADE IN THE DRAFT REDHERRING PROSPECTUS.(7) WE UNDERTAKE THAT SUB-REGULATION (4) OF REGULATION 32 AND CLAUSE(C) AND (D) OF SUB-REGULATION (2) OF REGULATION 8 OF THE SECURITIESAND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSUREREQUIREMENTS) REGULATIONS, 2009 SHALL BE COMPLIED WITH. WECONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THATPROMOTERS’ CONTRIBUTION SHALL BE RECEIVED AT LEAST ONE DAYBEFORE THE OPENING OF THE OFFER. WE UNDERTAKE THAT AUDITORS’CERTIFICATE TO THIS EFFECT SHALL BE DULY SUBMITTED TO THE BOARD.WE FURTHER CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TOENSURE THAT PROMOTERS’ CONTRIBUTION SHALL BE KEPT IN AN ESCROWACCOUNT WITH A SCHEDULED COMMERCIAL BANK AND SHALL BERELEASED TO THE COMPANY ALONG WITH THE PROCEEDS OF THE PUBLICOFFER.-NOT APPLICABLE(8) WE CERTIFY THAT THE PROPOSED ACTIVITIES OF THE COMPANY FORWHICH THE FUNDS ARE BEING RAISED IN THE PRESENT OFFER FALL WITHINTHE ‘MAIN OBJECTS’ LISTED IN THE OBJECT CLAUSE OF THEMEMORANDUM OF ASSOCIATION OR OTHER CHARTER OF THE COMPANYAND THAT THE ACTIVITIES WHICH HAVE BEEN CARRIED OUT UNTIL NOWARE VALID IN TERMS OF THE OBJECT CLAUSE OF ITS MEMORANDUM OFASSOCIATION.-NOT APPLICABLE(9) WE CONFIRM THAT NECESSARY ARRANGEMENTS HAVE BEEN MADE TOENSURE THAT THE MONEYS RECEIVED PURSUANT TO THE OFFER ARE KEPTIN A SEPARATE BANK ACCOUNT AS PER THE PROVISIONS OF SUB-SECTION (3)OF SECTION 73 OF THE COMPANIES ACT, 1956 AND THAT SUCH MONEYSSHALL BE RELEASED BY THE SAID BANK ONLY AFTER PERMISSION ISOBTAINED FROM ALL THE STOCK EXCHANGES MENTIONED IN THE REDHERRING PROSPECTUS. WE FURTHER CONFIRM THAT THE AGREEMENTENTERED INTO BETWEEN THE BANKERS TO THE OFFER AND THE COMPANYSPECIFICALLY CONTAINS THIS CONDITION.-NOTED FOR COMPLIANCE(10) WE CERTIFY THAT A DISCLOSURE HAS BEEN MADE IN THE DRAFT REDHERRING PROSPECTUS THAT THE INVESTORS SHALL BE GIVEN AN OPTIONTO GET THE SHARES IN DEMAT OR PHYSICAL MODE. NOT APPLICABLE(11) WE CERTIFY THAT ALL THE APPLICABLE DISCLOSURES MANDATED IN THESECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL ANDDISCLOSURE REQUIREMENTS) REGULATIONS, 2009 HAVE BEEN MADE INADDITION TO DISCLOSURES WHICH, IN OUR VIEW, ARE FAIR AND ADEQUATETO ENABLE THE INVESTOR TO MAKE A WELL INFORMED DECISION.(12) WE CERTIFY THAT THE FOLLOWING DISCLOSURES HAVE BEEN MADE INTHE DRAFT RED HERRING PROSPECTUS:(a) AN UNDERTAKING FROM THE COMPANY THAT AT ANY GIVEN TIME,THERE SHALL BE ONLY ONE DENOMINATION FOR THE EQUITY SHARESOF THE COMPANY AND(b) AN UNDERTAKING FROM THE COMPANY THAT IT SHALL COMPLY WITHSUCH DISCLOSURE AND ACCOUNTING NORMS SPECIFIED BY THE SEBIFROM TIME TO TIME.174

(13) WE UNDERTAKE TO COMPLY WITH THE REGULATIONS PERTAINING TOADVERTISEMENT IN TERMS OF THE SECURITIES AND EXCHANGE BOARD OFINDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS,2009 WHILE MAKING THE OFFER.(14) WE ENCLOSE A NOTE EXPLAINING HOW THE PROCESS OF DUE DILIGENCEHAS BEEN EXERCISED BY U.S. IN VIEW OF THE NATURE OF CURRENTBUSINESS BACKGROUND OR THE COMPANY, SITUATION AT WHICH THEPROPOSED BUSINESS STANDS, THE RISK FACTORS, PROMOTERS EXPERIENCE,ETC.(15) WE ENCLOSE A CHECKLIST CONFIRMING REGULATION-WISE COMPLIANCEWITH THE APPLICABLE PROVISIONS OF THE SECURITIES AND EXCHANGEBOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS)REGULATIONS, 2009, CONTAINING DETAILS SUCH AS THE REGULATIONNUMBER, ITS TEXT, THE STATUS OF COMPLIANCE, PAGE NUMBER OF THEDRAFT RED HERRING PROSPECTUS OF OFFER WHERE THE REGULATION HASBEEN COMPLIED WITH AND OUR COMMENTS, IF ANY."*PLEASE NOTE, HOWEVER,THAT THE SEBI REGISTRATION OF THE BANKERS TO THE OFFER, I.E. STATE BANK OFINDIA, HDFC BANK LIMITED AND THE HONGKONG AND SHANGHAI BANKINGCORPORATION LIMITED WERE VALID UP TO NOVEMBER 30, 2009, JANUARY 31, 2010AND NOVEMBER 30, 2009 RESPECTIVELY. THE APPLICATIONS FOR RENEWAL OF THECERTIFICATE OF REGISTRATION IN THE PRESCRIBED MANNER HAS BEEN MADE BYSTATE BANK OF INDIA LIMITED, HDFC BANK LIMITED AND THE HONGKONG ANDSHANGHAI BANKING CORPORATION LIMITED ON AUGUST 28, 2009, OCTOBER 30, 2009AND AUGUST 28, 2009 RESPECTIVELY, TO SEBI, THREE MONTHS BEFORE THE EXPIRYOF THE PERIOD OF CERTIFICATE AS REQUIRED UNDER REGULATION 8(1) OF THE SEBI(BANKERS TO THE ISSUE) REGULATIONS, 1994. THE APPROVALS OF SEBI IN THISREGARD IS PRESENTLY AWAITED BY STATE BANK OF INDIA, HDFC BANK LIMITEDAND THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED. NOCOMMUNICATION HAS BEEN RECEIVED FROM SEBI REJECTING THE SAIDAPPLICATIONS.All legal requirements pertaining to the Offer have been complied with at the time of filing of the RedHerring Prospectus with the RoC in terms of Section 60B of the Companies Act. All legalrequirements pertaining to the Offer will be complied with at the time of registration of theProspectus with the RoC in terms of Section 56, Section 60 and Section 60B of the Companies Act.The filing of the Red Herring Prospectus does not, however, absolve our Company or the SellingShareholder from any liabilities under Section 63 and Section 68 of the Companies Act or from therequirement of obtaining such statutory and other clearances as may be required for the purpose ofthe proposed Offer. SEBI further reserves the right to take up at any point of time, with the BRLMs,any irregularities or lapses in the Red Herring Prospectus.Disclaimer from our Company, the Selling Shareholder and the BRLMsOur Company, the Selling Shareholder, our Directors and the BRLMs accept no responsibility forstatements made otherwise than in this Red Herring Prospectus or in the advertisements or any othermaterial issued by or at instance of the above mentioned entities and anyone placing reliance on any othersource of information, including our website, www.sjvn.com would be doing so at his or her own risk.The BRLMs accept no responsibility, save to the limited extent as provided in the Offer Agreement enteredinto among the BRLMs, the Selling Shareholder and our Company dated February 25, 2010 and theUnderwriting Agreement to be entered into among the Underwriters, the Selling Shareholder and theCompany.175

All information shall be made available by us, the Selling Shareholder and BRLMs to the public andinvestors at large and no selective or additional information would be available for a section of the investorsin any manner whatsoever including at road show presentations, in research or sales reports or at biddingcentres or elsewhere , etc.Our Company, the Selling Shareholder, the BRLMs shall not be liable to the Bidders for any failure indownloading the Bids due to faults in any software/hardware system or otherwise.The BRLMs and their respective associates and affiliates may engage in transactions with, and performservices for, our Company and our group companies, affiliates or associates in the ordinary course ofbusiness and have engaged, or may in future engage, in commercial banking and investment bankingtransactions with our Company and our group companies, affiliates or associates for which they havereceived, and may in future receive, compensation.Investors that bid in the Offer will be required to confirm and will be deemed to have represented to ourCompany, the Selling Shareholder, the Underwriters and their respective directors, officers, agents,affiliates and representatives that they are eligible under all applicable laws, rules, regulations, guidelinesand approvals to acquire Equity Shares of our Company and will not offer, sell, pledge or transfer theEquity Shares of our Company to any person who is not eligible under applicable laws, rules, regulations,guidelines and approvals to acquire Equity Shares of our Company. Our Company, the Selling Shareholder,the Underwriters and their respective directors, officers, agents, affiliates and representatives accept noresponsibility or liability for advising any investor on whether such investor is eligible to acquire EquityShares of our Company.Disclaimer in Respect of JurisdictionThe Offer is being made in India to persons resident in India (including Indian nationals resident in Indiawho are not minors, HUFs, companies, corporate bodies and societies registered under the applicable lawsin India and authorized to invest in shares, Indian Mutual Funds registered with SEBI, Indian financialinstitutions, commercial banks, regional rural banks, co-operative banks (subject to RBI permission), ortrusts under applicable trust law and who are authorized under their constitution to hold and invest inshares, permitted insurance companies and pension funds) and to permitted non residents including EligibleNRIs, Foreign Institutional Investors (FIIs) and other eligible foreign investors (viz. Foreign VentureCapital Investors (FVCIs), multilateral and bilateral development financial institutions). This Red HerringProspectus does not, however, constitute an invitation to purchase shares offered hereby in any jurisdictionother than India to any person to whom it is unlawful to make an offer or invitation in such jurisdiction.Any person into whose possession this Red Herring Prospectus comes is required to inform himself orherself about, and to observe, any such restrictions. Any dispute arising out of the Offer will be subject tothe jurisdiction of appropriate court(s) in New Delhi, India only.No action has been or will be taken to permit a public offering in any jurisdiction where action would berequired for that purpose, except that this Red Herring Prospectus has been filed with SEBI forobservations. Accordingly, our Company‘s Equity Shares, represented thereby may not be offered or sold,directly or indirectly, and this Red Herring Prospectus may not be distributed, in any jurisdiction, except inaccordance with the legal requirements applicable in such jurisdiction. Neither the delivery of this RedHerring Prospectus nor any sale hereunder shall, under any circumstances, create any implication that therehas been no change in our Company‘s affairs from the date hereof or that the information contained hereinis correct as of any time subsequent to this date.The Equity Shares have not been, and will not be, registered under the Securities Act. The Equity Sharesmay not be offered, sold or delivered in the United States except pursuant to an exemption from, or in atransaction not subject to, the registration requirements of the Securities Act. The Equity Shares are beingoffered by the Selling Shareholder: (i) in the United States, only to “qualified institutional buyers” asdefined in, and pursuant to, Rule 144A under the Securities Act and (ii) outside the United States, inoffshore transactions in reliance on Regulation S under the Securities Act. Purchasers are hereby notifiedthat the Selling Shareholder may be relying on the exemptions from the provisions of Section 5 of theSecurities Act provided by Rule 144A.176

The Equity Shares have not been and will not be registered, listed or otherwise qualified in any otherjurisdiction outside India and may not be offered or sold, and Bids may not be made by persons inany such jurisdiction, except in compliance with the applicable laws of such jurisdiction.Disclaimer Clause of the NSEAs required, a copy of this Offer Document has been submitted to National Stock Exchange of IndiaLimited (hereinafter referred to as NSE). NSE has given vide its letter ref: NSE/LIST/132712-Y datedMarch 12, 2010 permission to the Issuer to use the Exchange’s name in the Offer Document as one of thestock exchanges on which this Issuer’s securities are proposed to be listed. The Exchange has scrutinizedthis draft offer document for its limited internal purpose of deciding on the matter of granting aforesaidpermission to the Issuer. It is to be distinctly understood that the aforesaid permission given by NSE shouldnot in any way be deemed or construed that the offer document has been cleared or approved by NSE; nordoes it in any manner warrant, certify or endorse the correctness or completeness of any of the contents ofthis offer document; nor does it warrant that this Issuer’s securities will be listed or continue to be listed onthe Exchange; nor does it take any responsibility for the financial or other soundness of this Issuer, itspromoters, its management or any scheme or project of this Issuer.Every person who desires to apply for or otherwise acquire any securities of this Issuer may do so pursuantto independent enquiry, investigation and analysis and shall not have any claim against the Exchangewhatsoever by reason of any loss which may be suffered by such person consequent to or in connectionwith such subscription/acquisition whether by reason of anything stated or omitted to be stated or any otherreason whatsoever.Disclaimer Clause of the BSEBombay Stock Exchange Limited (“the Exchange”) has given vide its letter dated March 11, 2010permission to this Company to use the Exchange’s name in the offer document as one of the stockexchanges on which this Company’s securities are proposed to be listed. The Exchange has scrutinized thisoffer document for its limited internal purpose of deciding on the matter of granting aforesaid permission tothe Company. The Exchange does not in any manneri. warrant, certify or endorse the correctness or completeness of any of the contents of this offerdocument; orii.iii.warrant that this Company’s securities will be listed or continue to be listed on the Exchange; ortake any responsibility for the financial or other soundness of this Company, its promoters, itsmanagement or any scheme or project of this Company.and it should not for any reason be deemed or construed that this offer document has been cleared orapproved by the Exchange. Every person who desires to apply for or otherwise acquires any securities ofthis Company may do so pursuant to independent enquiry, investigation and analysis and shall not have anyclaim against the Exchange whatsoever by reason of any loss which may be suffered by such personconsequent to or in connection with such subscription/acquisition whether by reason of anything stated oromitted to be stated or any other reason whatsoever.FilingA copy of the Red Herring Prospectus has been filed with SEBI at the Corporation Finance Department,Securities and Exchange Board of India, SEBI Bhawan, C – 4A, “G” Block, Bandra Kurla Complex,Bandra (East), Mumbai – 400 051, India.A copy of this Red Herring Prospectus, along with the documents required to be filed under Section 60B ofthe Companies Act, has been delivered for registration to the RoC and a copy of the Prospectus required tobe filed under Section 60 of the Companies Act will be delivered for registration to the to be filed with theRoC at the office of the Registrar of Companies, Punjab, Himachal Pradesh and Chandigarh at CorporateBhavan, Plot No. 4B Sector 27 B, Madhya Marg, Chandigarh 160 019.ListingIn connection with the Offer and in accordance with Regulation 7 (b)(ii) of the SEBI ICDR Regulations,our Company will apply to seek in principle approval from the NSE and BSE for listing of the Equity177

Shares. NSE is the Designated Stock Exchange with which the basis of allocation will be finalised for theOffer.If the permission to deal in and for an official quotation of the Equity Shares is not granted by any of theStock Exchanges, the Selling Shareholder shall forthwith repay, without interest, all moneys received fromthe applicants in pursuance of this Red Herring Prospectus. If such money is not repaid within eight daysafter the Selling Shareholder becomes liable to repay it (i.e., from the date of refusal or within 15 days fromthe date of Bid/Offer Closing Date, whichever is earlier), then the Selling Shareholder shall, on and fromexpiry of eight days, be liable to repay the money, with interest at the rate of 15% per annum on applicationmoney, as prescribed under Section 73 of the Companies Act.Our Company and the Selling Shareholder shall each ensure that all steps for the completion of thenecessary formalities for listing and commencement of trading at both the Stock Exchanges mentionedabove are taken within seven working days of finalisation of the date of basis of allotment for the Offer.IMPERSONATIONAttention of the applicants is specifically drawn to the provisions of sub-section (1) of Section 68 A ofthe Companies Act, which is reproduced below:“Any person who:(a)(b)makes in a fictitious name, an application to a company for acquiring or subscribing for, anyshares therein, orotherwise induces a company to allot, or register any transfer of shares therein to him, orany other person in a fictitious name,shall be punishable with imprisonment for a term which may extend to five years.”ConsentsConsents in writing of: (a) our Directors, our Company Secretary and Compliance Officer, the Auditors, theIPO Grading Agency, the Legal Advisors, the Bankers to the Company, the Bankers to the Offer, RefundBankers; and (b) the Book Running Lead Managers, the Syndicate Members and the Registrar to the Offerto act in their respective capacities, have been obtained and filed along with a copy of this Red HerringProspectus with the RoC as required under Sections 60 and 60B of the Companies Act and such consentshave not been withdrawn up to the time of delivery of this Red Herring Prospectus for registration with theRoC.In accordance with the Companies Act and the SEBI ICDR Regulations, M/s. Hingorani M & Co.,Chartered Accountants has provided its written consent to the inclusion of its report on financial statementsand report relating to the possible general and special tax benefits, as applicable, accruing to our Companyand its Shareholders, included in this Red Herring Prospectus in the form and context in which they appearin this Red Herring Prospectus and such consent and report will not be withdrawn up to the time of deliveryof the Red Herring Prospectus and the Prospectus for registration with the RoC.Credit Analysis and Research Limited, a SEBI registered credit rating agency, has given its written consentto being named as an expert for purposes of grading of the Offer and to the inclusion of its grading of theOffer in the Red Herring Prospectus and such consent and report will not be withdrawn up to the time ofdelivery of the Red Herring Prospectus and the Prospectus to the Designated Stock Exchange.Expert OpinionExcept for the report of CARE in respect of the IPO Grading of the Offer (a copy of which will be annexedto the Red Herring Prospectus), furnishing the rationale for its grading which will be provided to theDesignated Stock Exchange and except for the reports of the Auditors of our Company on the RestatedFinancial Statements, and Statement of Tax Benefits, included in this Red Herring Prospectus, ourCompany has not obtained any expert opinions.178

Offer ExpensesThe expenses for the Offer include lead management fees, underwriting and selling commission, registrar’sfees, advertisement and marketing expenses, printing and distribution expenses, IPO Grading expenses,legal fees, SEBI filing fees, bidding software expenses, depository charges and listing fees to the StockExchanges. The details of the estimated Offer expenses are set forth below.ActivityRs. inmillion% of the OfferExpenses% of total OfferSizeLead management fees * [●] [●] [●]Underwriting and selling commission* (including commission to[●] [●] [●]SCSBs for ASBA Applications *)Registrar’s fees* [●] [●] [●]Advertisement and marketing expenses* [●] [●] [●]Printing and distribution expenses* [●] [●] [●]IPO Grading expenses * [●] [●] [●]Advisors * [●] [●] [●]Bankers to the Offer * [●] [●] [●]Others (SEBI filing fees, bidding software expenses, depositorycharges, listing fees, etc.) * [●] [●] [●]Total [●] [●] [●]* Will be incorporated at the time of filing of the Prospectus.Lead managers’, registrars’, depositories’ and legal fees and expenses, and publication charges shall beborne by the Selling Shareholder.Fees Payable to the Book Running Lead Managers and Syndicate MembersThe total fees payable to the Book Running Lead Managers and Syndicate Members (includingunderwriting commission, selling commission) will be as stated in the Engagement Letter with the BRLMsdated December 22 2009, a copy of which is available for inspection at the Registered Office and corporateoffice of our Company.Fees Payable to the Registrar to the OfferThe fees payable to the Registrar to the Offer including fees for processing of application, data entry,printing of CAN/ revised CAN/ refund order, preparation of refund data on magnetic tape, printing of bulkmailing register, etc. will be as per the Offer Agreement dated February 25, 2010 signed with our Companyand the Selling Shareholder, a copy of which is available for inspection at the Registered Office of ourCompany.The Registrar to the Offer will be reimbursed for all out-of-pocket expenses including cost of stationery,postage, stamp duty and communication expenses. Adequate funds will be provided to the Registrar to theOffer to enable them to make refunds in any of the modes described in this Red Herring Prospectus andsend refund orders or allotment advice by registered post/speed post/under certificate of posting.Particulars regarding Public or Rights Issues during the Last Five YearsThere have been no public or rights offer by our Company in the five years preceding the date of this RedHerring Prospectus.Issues otherwise than for CashFor details on issue of shares for consideration other than for cash, see section titled “Capital Structure” onpage 99.Commission and Brokerage paid on Previous Issues of our Equity SharesSince this is the initial public issue of our Company, no sum has been paid or has been payable ascommission or brokerage for subscribing to or procuring or agreeing to procure public subscription for anyof our Equity Shares since our incorporation.179

Companies under the Same ManagementAs on the date of this Red Herring Prospectus, there are no companies under the same management withinthe meaning of erstwhile Section 370 (1B) of the Companies Act.Promise vs. Performance – Last Three IssuesThere has not been any previous public offer of our Equity Shares.Outstanding Preference Shares, Debentures or BondsAs on the date of this Red Herring Prospectus, our Company does not have any outstanding redeemablepreference shares, debentures or bonds.Partly Paid-Up SharesAs on the date of this Red Herring Prospectus, there are no partly paid-up Equity Shares of our Company.Stock Market Data of our Equity SharesThis being an initial public offer of the Equity Shares of our Company, the Equity Shares are not listed onany stock exchange and thus there is no stock market data available.Mechanism for Redressal of Investor Grievances by our CompanyThe agreement between the Registrar to the Offer, the Selling Shareholder and us, provides for retention ofrecords with the Registrar to the Offer for a period of at least one year from the last date of dispatch ofletters of allotment, demat credit, refund orders to enable the investors to approach the Registrar to theOffer for redressal of their grievances.All grievances relating to the Offer may be addressed to the Registrar to the Offer, giving full details suchas name, address of the applicant, application number, number of shares applied for, amount paid onapplication, Depository Participant, and the bank branch or collection center where the application wassubmitted.All grievances relating to the ASBA process may be addressed to the Registrar to the Offer with a copy tothe relevant SCSB, giving full details such as name, address of the applicant, number of Equity Sharesapplied for, amount paid on application and the Designated Branch or the collection centre of the SCSBwhere the Bid-cum-Application Form was submitted by the ASBA Bidders.Disposal of Investor Grievances by our CompanyWe estimate that the average time required by us, the Selling Shareholder or the Registrar to the Offer forthe redressal of routine investor grievances shall be seven days from the date of receipt of the complaint. Incase of non-routine complaints and complaints where external agencies are involved, our Company and theSelling Shareholder will seek to redress these complaints as expeditiously as possible.Our Company will constitute a Shareholders/Investor Grievance Committee to deal with and monitor theredressal of complaints from shareholders, prior to the filing of the Red Herring Prospectus. For details seesection titled “Our Management” on page 104.We and the Selling Shareholder have appointed Mr. P.S.R. Murthy, Company Secretary as the ComplianceOfficer and he may be contacted in case of any pre-Offer or post-Offer related problems. He can becontacted at the following address:SJVN LimitedHimfed BuildingNew Shimla -171 009180

Himachal PradeshTel: +91 177 267 0741Fax: +91 177 267 0542Email: psr.murthy@sjvn.nic.inMechanism for Redressal of Investor Grievances by Companies under the Same ManagementWe do not have any other company under the same management within the meaning of erstwhile Section370 (1B) of the Companies Act.Changes in AuditorsThe Auditors of our Company are appointed/re-appointed by the Office of the Comptroller and Auditor Generalof India. The following are the details of the changes in auditors in the last three Fiscals:S. No. Name of Auditor Date of Appointment1. R Bansal & Co(NR0095)3065 1 st FloorSector 38 DChandigarhJuly 31, 20072. R Bansal & Co(NR0095)3065 1 st FloorSector 38 DChandigarh3 Hingorani M & Co.,(006772N)35, Netaji Subhash MargDariya Ganj, New Delhi- 110 002Capitalisation of Reserves or ProfitsAugust 7, 2008August 13, 2009We have not capitalised our reserves or profits at any time during last five years.Revaluation of AssetsThere has been no revaluation of assets of our Company since its incorporation.Tax ImplicationsInvestors that are allotted Equity Shares in the offer will be subject to capital gains tax on any resale of theEquity Shares at applicable rates, depending on the duration for which the investors have held the EquityShares prior to such resale and whether the Equity Shares are sold on the stock exchanges. For details, seesection titled “Statement of Possible Tax Benefits Available to the Company and its Shareholders” onpage 40 of this Red Herring Prospectus.181

SECTION VII – OFFER RELATED INFORMATIONBASIC TERMS OF THE OFFERThe Equity Shares being offered are subject to the provisions of the Companies Act, SEBI ICDRRegulations, FEMA, our Memorandum and Articles of Association, the terms of the Red HerringProspectus, Prospectus, Bid cum Application Form, the Revision Form, the ASBA Bid cum ApplicationForm, the ASBA Revision Form, the CAN and other terms and conditions as may be incorporated in theAllotment advices and other documents/certificates that may be executed in respect of the Offer. The EquityShares shall also be subject to laws as applicable, guidelines, notifications and regulations relating to theOffer of capital and listing and trading of securities issued from time to time by SEBI, the Government ofIndia, the Stock Exchanges, the RBI, RoC and/or other relevant authorities, as in force on the date of theOffer and to the extent applicable.Authority for the OfferFor details see section titled “Other Regulatory and Statutory Disclosures” on page 171.Ranking of Equity SharesThe Offer Shares shall be subject to the provisions of the Companies Act, our Memorandum and Articles ofAssociation and shall rank pari passu in all respects with all other Equity Shares of the Company, includingin respect of the rights to receive dividend. The Allottees in receipt of Allotment of Equity Shares under theOffer will be entitled to voting rights, dividends or any other corporate benefits, if any, declared by us afterthe date of Allotment. For further details, please see section titled “Main Provisions of the Article ofAssociation” on page 235 of the Red Herring Prospectus.Cost for the OfferThe cost for the Offer shall be borne by the Selling Shareholder, as the proceeds of the Offer shall bereceived by the Selling Shareholder.Mode of Payment of DividendThe declaration and payment of dividend will be as per the provisions of the Companies Act andrecommended by the Board of Directors and the Shareholders at their discretion and will depend on anumber of factors, including but not limited to earnings, capital requirements and overall financial conditionof our Company. We shall pay dividends in cash and as per the dividend policy of the Company subject tothe provisions of the Companies Act. For more information on the dividend policy of the Company, pleaserefer to section titled “Main Provisions of the Articles of Association” on page 235.Face Value, Offer Price and Price BandThe face value of the Equity Shares is Rs. 10. The Floor Price per Equity Shares is Rs. [●] and the CapPrice per Equity Shares is Rs. [●]. The Offer Price will be determined by the Selling Shareholder and ourCompany in consultation with the BRLMs on the basis of assessment of market demand for the EquityShares offered by way of Book Building Process. At any given point of time there shall be only onedenomination of the Equity Shares of our Company, subject to applicable laws.Compliance with SEBI ICDR RegulationsWe shall comply with applicable disclosure and accounting norms specified by SEBI from time to time.Rights of the Equity ShareholdersSubject to applicable laws, rules, regulations and guidelines and the Articles of Association, all the equityshareholders shall have the following rights:• Right to receive dividend, if declared;182

• Right to attend general meetings and exercise voting rights, unless prohibited by law;• Right to vote on a poll either in person or by proxy;• Right to receive offer for rights shares and be allotted bonus shares, if announced;• Right to receive surplus on liquidation;• Right of free transferability; and• Such other rights, as may be available to a shareholder of a listed public limited company underthe Companies Act, terms of the listing agreements with the Stock Exchanges(s) and theMemorandum and Articles of Association.For a detailed description of the main provision of the Articles of Association of our Company relating tovoting rights, dividend, forfeiture and lien and/or consolidation/splitting, etc., please refer to section titled“Main Provisions of the Articles of Association” beginning on page 235 of this Red Herring Prospectus.Market Lot and Trading LotIn terms of Section 68B of the Companies Act, the Equity Shares shall be Allotted only in dematerializedform. In terms of the SEBI ICDR Regulations, the trading in the Equity Shares shall only be indematerialized form for all investors. Since trading of the Equity Shares will be in dematerialized mode, thetradable lot is one Equity Share. Allotment and allocation of Equity Shares through the Offer will be doneonly in electronic form in multiples of 1 Equity Share subject to a minimum allotment of [●] Equity Sharesto the successful Bidders.Joint HoldersWhere two or more persons are registered as the holders of any Equity Shares, they shall be deemed to holdthe same as joint tenants with the benefits of the survivorship.Nomination Facility to InvestorIn accordance with Section 109A of the Companies Act, the sole or First Bidder, along with other jointBidders, may nominate any one person in whom, in the event of the death of sole Bidder or in case of jointBidders, death of all the Bidders, as the case may be, the Equity Shares Allotted, if any, shall vest. Aperson, being a nominee, entitled to the Equity Shares by reason of the death of the original holder(s), shallin accordance with Section 109A of the Companies Act, be entitled to the same advantages to which he orshe would be entitled if he or she were the registered holder of the Equity Share(s). Where the nominee is aminor, the holder(s) may make a nomination to appoint, in the prescribed manner, any person to becomeentitled to Equity Share(s) in the event of his or her death during the minority. A nomination shall standrescinded upon a sale of equity share(s) by the person nominating. A buyer will be entitled to make a freshnomination in the manner prescribed. Fresh nomination can be made only on the prescribed form availableon request at the Registered Office of our Company or to the Registrar and Transfer Agents of ourCompany.In accordance with Section 109B of the Companies Act, any Person who becomes a nominee by virtue ofSection 109A of the Companies Act, shall upon the production of such evidence as may be required by theBoard, elect either:• to register himself or herself as the holder of the Equity Shares; or• To make such transfer of the Equity Shares, as the deceased holder could have made.Further, the Board may at any time give notice requiring any nominee to choose either to be registeredhimself or herself or to transfer the Equity Shares, and if the notice is not complied with within a period ofninety days, the Board may thereafter withhold payment of all dividends, bonuses or other moneys payablein respect of the Equity Shares, until the requirements of the notice have been complied with.183

Notwithstanding anything stated above, since the Allotment in the Offer will be made only indematerialised mode, there is no need to make a separate nomination with us. Nominations registered withthe respective depository participant of the applicant would prevail. If the investors require changing thenomination, they are requested to inform their respective depository participant.Application by eligible NRIs, FIIs registered with SEBI and FVCI registered with SEBIIt is to be distinctly understood that there is no reservation for NRI’s and FIIs registered with SEBI or FVCIregistered with SEBI. As per RBI regulations, OCBs cannot participate in the Issue.Bidding PeriodBidders may submit their bid only in the Bidding Period. The Bid/Offer Opening Date is April 29, 2010 andthe Bid/Offer Closing Date is May 3, 2010.Arrangements for disposal of odd lotsSince the market lot for our Equity Shares will be one, no arrangements for disposal of odd lots arerequired.Restrictions, if any on Transfer and Transmission of Equity SharesFor a detailed description in respect of restrictions, if any, on the Allotment of shares and on theirconsolidation/ splitting, please refer to “Main Provisions of the Articles of Association” on page 235 of theRed Herring Prospectus.Option to receive Equity Shares in Dematerialized FormInvestors should note that the Allotment of Offer Shares to all successful Bidders will only be indematerialised form. Bidders will not have the option of getting the Allotment of Offer Shares in physicalform.JurisdictionExclusive jurisdiction for the purpose of the Offer is with the competent courts/authorities in New Delhi,India.184

OFFER STRUCTUREThe present Offer of 415,000,000 Equity Shares of Rs. 10 each, at a price of Rs. [●] per share for cashaggregating to Rs. [●] million is being made through the 100% Book Building Process. The Offercomprises a Net Offer of 411,650,000 Equity Shares to the public and a reservation of 3,350,000 EquityShares for the Eligible Employees at the Offer Price. The Offer and Net Offer constitutes 10.03% and9.95% respectively of the paid up Capital of our Company.Pursuant to the letter from the MOP bearing no. 23/24/2009-H-II dated April 13, 2010 our Company hasallotted 27,812,500 Equity Shares to the GoHP on April 13, 2010, at a price of Rs. 14.72 per share for aninvestment aggregating to Rs. 409.40 million. Consequently the issued and the paid up capital of theCompany has increased to Rs. 41,366,265,000 comprising of 4,136,626,500 fully paid up Equity Shares.As also mentioned in the letter from the MOP bearing no. 23/24/2009-H-II dated April 13, 2010 the numberof Equity Shares to be offered for sale in the Offer (i.e. 10.03% of the equity share capital of the Company)stand revised to 415,000,000 Equity Shares. For further details, see sections titled “The Offer” and “CapitalStructure” on page 9 and 23, of this Red Herring Prospectus respectively.EligibleEmployeesPortionQIBs*Retail IndividualBiddersNon-Institutional BiddersNumber of Equity Shares* *3,350,000 EquitySharesAt least246,990,000Equity Sharesavailable forAllotment or atleast 60 % of theNet OfferNot less than123,495,000 EquityShares available forallocation or Net Offerless allocation to QIBBidders and Non-Institutional Bidders.Not less than 41,165,000Equity Shares available forallocation or Net Offer lessallocation to QIB Bidders andRetail Individual Bidders.Percentage of Offer sizeavailableforAllotment/allocation***Up to 0.807 % ofthe Offer.The EmployeeReservationPortioncomprises of0.0810% of thepaid up capital ofour Company.At least 60% ofthe Net Offershall be Allottedto QIBs.However, at least5% of the QIBPortion shall beavailable forallocationproportionately toMutual Fundsonly.Not less than 30% ofthe Net Offer availablefor allocation or theNet Offer lessallocation to QIBBidders and Non-Institutional Bidders.Not less than 10% of the NetOffer available for allocationor the Net Offer lessallocation to QIB Bidders andRetail Individual Bidders.BasisofAllotment/Allocation ifrespective category isoversubscribedProportionate.However, thevalue ofallotment to anEligibleEmployee shallnot exceed Rs.100,000.Proportionate asfollows:(a) 12,349,500Equity Sharesshall be allocatedon a proportionatebasis to MutualFunds; andProportionateProportionateBid Lot [●] EquityShares(b) 234,640,500Equity Sharesshall be allottedon a proportionatebasis to all QIBsincluding MutualFunds receivingallocation as per(a) above.Minimum Bid One Bid Lot Such number ofBid Lots that theBid Amountexceeds Rs.100,000[●] Equity Shares [●] Equity Shares [●] Equity SharesOne Bid LotSuch number of Bid Lots thatthe Bid Amount exceeds Rs.100,000185

EligibleEmployeesPortionMaximum BidSuch number ofBid Lots subjectto the maximumbid by eachEligibleEmployee notexceeding Rs.100,000 .Allotment LotOne Bid Lot andin multiples ofone Equity SharethereafterTrading Lot One EquityShareMode of AllotmentCompulsorily indematerializedform.QIBs*Such number ofBid Lots notexceeding the NetOffer, subject toapplicable limits.One Bid Lot andin multiples ofone Equity SharethereafterRetail IndividualBiddersSuch number of BidLots whereby the BidAmount does notexceed Rs. 100,000.One Bid Lot and inmultiples of oneEquity Share thereafterNon-Institutional BiddersSuch number of Bid Lots notexceeding the Net Offersubject to applicable limits.One Bid Lot and in multiplesof one Equity Share thereafterOne Equity Share One Equity Share One Equity ShareCompulsorily indematerializedform.Compulsorily indematerialized form.Compulsorilydematerialized form.in186

EligibleEmployeesPortionQIBs*Retail IndividualBiddersNon-Institutional BiddersWho can ApplyEligibleEmployeesPublic financialinstitutions asspecified inSection 4A of theCompanies Act,FIIs and their subaccountsregistered withSEBI, other thansub-accounts whoare foreigncorporates orforeignindividuals,scheduledcommercialbanks, mutualfunds registeredwith SEBI,multilateral andbilateraldevelopmentfinancialinstitutions,venture capitalfunds registeredwith SEBI, FVCIsregistered withSEBI, stateindustrialdevelopmentcorporations,insurancecompaniesregistered withthe InsuranceRegulatory andDevelopmentAuthority,provident funds(subject toapplicable law)with minimumcorpus of Rs. 250million andpension fundswith minimumcorpus of Rs. 250million, theNationalInvestment Fundset up byresolution F. No.2/3/2005-DD-IIdated November23, 2005 of theGoI published inthe Gazette ofIndia andinsurance fundsset up andmanaged by army,navy or air forceof the Union ofIndiaIndividuals (includingHUFs, Eligible NRIs)Eligible NRIs, ResidentIndian individuals, HUF (inthe name of Karta),companies, corporate bodies,scientific institutions societiesand trusts and sub-accounts ofFIIs registered with SEBIwhich are foreign corporatesor foreign individuals187

QIBs*Retail IndividualBiddersNon-Institutional BiddersTerms of PaymentEligibleEmployeesPortionMargin Amountshall be payableat the time ofsubmission ofBid cumApplicationForm to theSyndicateMember. #Full Bid Amounton biddingQIB MarginAmount shall bepayable at thetime ofsubmission of Bidcum ApplicationForm to theBRLMs.Margin Amount shallbe payable at the timeof submission of Bidcum Application Formto the SyndicateMember#Margin Amount shall bepayable at the time ofsubmission of Bid cumApplication Form to theSyndicate Member. #Margin AmountAt least 10% ofBid AmountFull Bid Amount onbiddingFull Bid Amount on bidding* 5% of the QIB Portion shall be available for allocation to Mutual Funds on a proportionate basis. The remainder shall beavailable for allocation on a proportionate basis to QIBs and Mutual Funds, subject to valid Bids being received from them at orabove the Offer Price. However, if the aggregate demand from Mutual Funds is less than 5% of the QIB Portion, the balanceEquity Shares available for Allotment in the Mutual Fund Portion will be allocated proportionately to the QIB Bidders.** Pursuant to the provisions of regulation 41(2)(a) of the SEBI ICDR Regulations, the Net Offer consists of an offer for sale of lessthan 10% of the issued and paid up share capital of our Company and is being made through a 100% Book Building Process incompliance with the provisions of Rule 19(2)(b) of the SCRR, wherein at least 60% of the Net Offer shall be Allotted on aproportionate basis to QIBs. 5% of the QIB Portion shall be available for allocation on a proportionate basis to Mutual Fundsonly. The remainder shall be available for allocation on a proportionate basis to QIBs, including Mutual Funds, subject to validBids being received at or above the Offer Price. If at least 60 % of the Net Offer cannot be Allotted to QIBs, then the entireapplication money will be refunded forthwith. Further, not less than 10% of the Net Offer shall be available for allocation on aproportionate basis to Non-Institutional Bidders and not less than 30% of the Net Offer shall be available for allocation on aproportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Offer Price.*** Any unsubscribed portion/ unallocated portion in the Employee Reservation Portion shall be added to the Net Offer. In case ofunder-subscription in the Net Offer, spill-over to the extent of under-subscription shall be permitted from the reserved category tothe Net Offer. If at least 60% of the Net Offer cannot be Allotted to QIBs, then the entire application money will be refunded. Inthe event that the aggregate demand in the QIB Portion has been met, under subscription/ unallocated portion in any othercategory, if any, would be allowed to be met with spill-over from other categories or combination of categories at the discretionof the Selling Shareholder and our Company in consultation with the BRLMs.# In case of ASBA Bidders, the SCSB shall be authorized to block such funds in the bank account of the ASBA Bidder that arespecified in the ASBA Bid cum Application Form.Retail and Employee DiscountA discount of Rs [] to the Offer Price determined pursuant to completion of the Book Building Process shallbe offered to Retail Individual Bidders and Eligible Employees (the “Retail and EmployeeDiscount”).Retail Individual Bidders and Eligible Employees bidding at a price within the Price Band haveto make payment based on their highest bid price option. Retail Individual Bidders and Eligible Employeesbidding at Cut-Off Price have to ensure payment at the upper end of the Price Band.Retail Individual Bidders and Eligible Employees should note that discount is not offered onapplication but on allotment. The excess amount paid on application would be refunded to suchBidders after Allotment along with any other refund, if any.Withdrawal of the OfferOur Company and the Selling Shareholder in consultation with the BRLMs, reserves the right not toproceed with the Offer at any time after the Bid/Offer Opening Date but before the Allotment. If SellingShareholder /our Company withdraw the Offer, it shall issue a public notice that shall include reasons forsuch withdrawal, within two days of the Bid/Offer Closing Date. The notice of withdrawal shall be issuedin the same newspapers where the pre-Offer advertisements were published and the Stock Exchanges shallalso be informed promptly. The BRLMs, through the Registrar to the Offer, shall notify the SCSBs tounblock bank accounts of the ASBA Bidders within one day from the receipt of such notification. If theSelling Shareholder /our Company withdraw the Offer after the Bid/Offer Closing Date and thereafterdetermines that it will proceed with an initial public offering, it shall file a fresh Red Herring Prospectuswith SEBI.188

Notwithstanding the foregoing, the Offer is also subject to obtaining (i) the final listing and tradingapprovals of the Stock Exchanges, which our Company shall apply for only after Allotment and withinseven Working Days of finalization of Basis of Allotment and (ii) the final RoC approval of the Prospectusafter it is filed with the Stock Exchanges.Letters of Allotment or Refund OrdersOur Company and Selling Shareholder shall facilitate and shall give credit to the beneficiary account withdepository participants within fifteen days of the date of the Bid/Offer Closing Date. Our Company, onbehalf of the Selling Shareholder, shall dispatch refund orders, if any, of value up to Rs. 1,500, by “UnderCertificate of Posting”, and will dispatch refund orders above Rs. 1,500, if any, by registered post or speedpost at the sole or first Bidder‘s sole risk within 15 days of the Bid/Offer Closing Date.Interest in case of delay in dispatch of Allotment Letters/Refund OrdersIn accordance with the Companies Act, the requirements of the Stock Exchanges and the SEBI ICDRRegulations, the Selling Shareholding further undertakes that:• Allotment of Equity Shares will be made only in dematerialized form within 15 days from theBid/Offer Closing Date;• Dispatch of refund orders will be done within 15 days from the Bid/Offer Closing Date or if, in acase where the refund or portion thereof is made in electronic manner, the refund instructions willbe given to the clearing system; and• The Selling Shareholder shall pay interest at 15% per annum (for any delay beyond the 15 day timeperiod as mentioned above), if allotment is not made, refund orders are not dispatched or if, in acase where the refund or portion thereof is made in electronic manner, through Direct Credit,NEFT, RTGS or NECS the refund instructions have not been given to the clearing system in thedisclosed manner and/or demat credits are not made to investors within the 15 day time prescribedabove.The Selling Shareholder will provide adequate funds required for dispatch of refund orders or Allotmentadvice to the Registrar to the Offer.Refunds will be made through any of the modes as described in the Red Herring Prospectus and bankcharges, if any, for encashing cheques, pay orders or demand drafts at other centers will be payable by theBidders.Offer ProgramBID/OFFER OPENS ON April 29, 2010BID/OFFER CLOSES ON May 3, 2010Bids and any revision in Bids will be accepted only between 10.00 a.m. and 5.00 p.m. (Indian StandardTime) during the Bidding Period as mentioned above at the bidding centers mentioned in the Bid cumApplication Form, except that on the Bid/Offer Closing Date, Bids excluding ASBA Bids, or in case ofBids submitted through ASBA, the Designated Branches of the SCSBs shall be accepted only between10.00 a.m. and 3.00 p.m. (Indian Standard Time) and uploaded until (i) 4.00 p.m. in case of Bids by QIBBidders and Non-Institutional Bidders; and (ii) 5.00 p.m., which may be extended up to such time aspermitted by the Stock Exchanges in case of Bids by Retail Individual Bidders and Eligible Employeeswhere the Bid Amount is up to Rs. 100,000. Due to limitation of time available for uploading the Bids onthe Bid/Offer Closing Date, the Bidders are advised to submit their Bids one day prior to the Bid/OfferClosing Date and, in any case, no later than 1.00 p.m. (Indian Standard Time) on the Bid/Offer ClosingDate. Bidders are cautioned that in the event a large number of Bids are received on the Bid/Offer ClosingDate, as is typically experienced in public offerings in India, which may lead to some Bids not beinguploaded due to lack of sufficient time to upload, such Bids that have not been uploaded will not beconsidered for allocation in the Offer. If such Bids are not uploaded, the Selling Shareholder, our Company,the BRLMs and the Syndicate Members shall not be responsible. Bids will be accepted only on WorkingDays.189

On the Bid/Offer Closing Date, extension of time may be granted by the Stock Exchanges only foruploading the Bids received for an amount upto Rs.100,000 by Retail Individual Bidders and EligibleEmployees bidding under the Employee Reservation Portion, after taking into account the total number ofBids received up to the closure of timings for acceptance of Bid-cum Application Forms and ASBA Formsas stated herein and reported by the BRLMs to the Stock Exchanges within half an hour of such closure.The Selling Shareholder and our Company in consultation with the Book Running Lead Managers reservesthe right to revise the Price Band during the Bidding Period in accordance with SEBI ICDR Regulations.The Cap Price shall not be more than 20% of the Floor Price, i.e., the Floor Price can move up or down tothe extent of 20% of the Floor Price as announced in the newspapers or as mentioned in the RHP and theCap Price will be revised accordingly.In case of revision in the Price Band, the Bidding Period will be extended for three additionalWorking Days after revision of Price Band subject to the Bidding Period not exceeding 10 WorkingDays. Any revision in the Price Band and the revised Bidding Period, if applicable, will be widelydisseminated by notification to the SCSBs and Stock Exchanges, by issuing a press release, and alsoby indicating the change on the web site of the BRLMs and at the terminals of the members of theSyndicate.190

OFFER PROCEDUREBook Building ProcessPursuant to the provisions of regulation 41 (2) (a) of the SEBI ICDR Regulations, the Net Offer consists ofan offer for sale of less than 10% of the issued and paid up share capital of our Company and is being madethrough a 100% book building process in compliance with the provisions of Rule 19(2)(b) of the SCRR,wherein at least 60% of the Net Offer shall be Allotted on a proportionate basis to Qualified InstitutionalBuyers. 5% of the QIB Portion shall be available for allocation on a proportionate basis to Mutual Fundsonly. The remainder shall be available for allocation on a proportionate basis to QIBs, including MutualFunds, subject to valid Bids being received at or above the Offer Price. If at least 60 % of the Net Offercannot be Allotted to QIBs, then the entire application money will be refunded forthwith. Further, not lessthan 10% of the Net Offer shall be available for allocation on a proportionate basis to Non-InstitutionalBidders and not less than 30% of the Net Offer shall be available for allocation on a proportionate basis toRetail Individual Bidders, subject to valid Bids being received at or above the Offer Price. Undersubscription/unallocated portion, if any, in any category, except the QIB Portion, would be allowed to bemet with spill-over from any other category or combination of categories at the discretion of our Company,in consultation with the BRLMs.Bidders are required to submit their Bids through the Syndicate. QIB Bidders are required to submit theirBids either through BRLMs or their affiliates only.Investors should note that Allotment of Equity Shares to all successful Bidders will only be in thedematerialized form. Bidders will not have the option of getting Allotment of the Equity Shares inphysical form. The Equity Shares on Allotment shall be traded only in the dematerialized segment ofthe Stock Exchanges.Further, our Company, the Selling Shareholder and the Book Running Lead Managers are not liable toinform the investors of any amendments or modifications or changes in applicable laws or regulationswhich may occur after the date of the RHP. Bidders are advised to make their independent investigationsand ensure that the number of Equity Shares Bid for do not exceed the applicable limits under applicablelaws, regulations or approvals. Bidders are advised to make their own enquiries about the limits applicableto them.Bid cum Application FormBidders shall only use the specified Bid cum Application Form bearing the stamp of a member of theSyndicate for the purpose of making a Bid in terms of the RHP. Before being issued to Bidders, the Bidcum Application Form shall be serially numbered and date and time stamped at the bidding centers andsuch form shall be issued in duplicate signed by the Bidder and countersigned by the relevant member ofthe Syndicate. The Bid cum Application Form shall contain information about the Bidder and the price andthe number of Equity Shares that the Bidder wishes to Bid. The Bidders shall have the option to make amaximum of three Bids in the Bid cum Application Form and such options shall not be considered asmultiple Applications. Upon the allocation of Equity Shares, dispatch of the CAN, and filing of theProspectus with the RoC, the Bid cum Application Form shall be considered as the application form. Uponcompleting and submitting the Bid cum Application Form to a member of the Syndicate, the Bidder isdeemed to have authorized our Company to make the necessary changes in the Red Herring Prospectus andthe Bid cum Application Form as would be required for filing the Prospectus with the RoC and as would berequired by RoC after such filing, without prior or subsequent notice of such changes to the Bidder.The prescribed color of the Bid cum Application Form for various categories is as follows:CategoryResident Indians, Eligible NRIs applying on a non repatriation basis, andQIBEligible NRIs, FVCIs, FIIs on a repatriation basisASBA BiddersEligible Employees in the Reservation PortionColor of Bid cum Application FormWhiteBlueGreenPink191

ASBA Bidders shall submit an ASBA Bid cum Application Form either in physical or electronic form tothe SCSB authorizing blocking funds that are available in the bank account specified in the ASBA Bid cumApplication Form used by ASBA Bidders. Bidders shall have the option to make a maximum of three Bidsin the Bid cum Application Form and such options shall not be considered as multiple Applications. Uponthe allocation of Equity Shares, dispatch of the CAN, and filing of the Prospectus with the RoC, the ASBABid cum Application Form shall be considered as the Application Form. Upon completing and submittingthe ASBA Bid cum Application Form for ASBA Bidders to the SCSB, the ASBA Bidder is deemed to haveauthorized our Company to make the necessary changes in the Red Herring Prospectus and the ASBA Bidcum Application Form as would be required for filing the Prospectus with the RoC and as would berequired by RoC after such filing, without prior or subsequent notice of such changes to the ASBA Bidder.Who can Bid?• Indian nationals resident in India who are majors, or in the names of their minor children asnatural/legal guardians in single or joint names (not more than three);• Hindu Undivided Families or HUFs, in the individual name of the Karta. The Bidder shouldspecify that the Bid is being made in the name of the HUF in the Bid cum Application Form asfollows: “Name of Sole or First bidder: XYZ Hindu Undivided Family applying through XYZ,where XYZ is the name of the Karta”. Bids by HUFs would be considered at par with those fromindividuals;• Companies, corporate bodies and societies registered under the applicable laws in India andauthorized to invest in the equity shares;• Eligible NRIs on a repatriation basis or a non-repatriation basis subject to applicable laws. NRI‘sother than Eligible NRI‘s are not eligible to participate in the Offer;• Mutual Funds registered with SEBI;• Indian Financial Institutions, scheduled commercial banks (excluding foreign banks), regionalrural banks, co-operative banks (subject to RBI regulations and the SEBI ICDR Regulations andother regulations, as applicable);• Venture Capital Funds registered with SEBI;• Foreign Venture Capital Investors registered with SEBI;• Multilateral and bilateral development financial institutions;• State Industrial Development Corporations;• Trusts/societies registered under the Societies Registration Act, 1860, as amended, or under anyother law relating to Trusts/societies and who are authorized under their constitution to hold andinvest in equity shares;• FIIs and sub-accounts registered with SEBI, other than a sub-account which is a foreign corporateor a foreign individual under the QIB Portion;• Sub-accounts of FIIs registered with SEBI, which are foreign corporate or foreign individuals, onlyunder the Non Institutional Bidders Category.• Scientific and/or Industrial Research Organizations authorized to invest in equity shares;• Insurance companies registered with Insurance Regulatory and Development Authority, India;• Provident Funds with minimum corpus of Rs. 250 million and who are authorized under theirconstitution to hold and invest in equity shares;192

• Pension Funds with minimum corpus of Rs. 250 million and who are authorized under theirconstitution to hold and invest in equity shares;• National investment fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005of Government of India published in the Gazette of India;• Insurance funds set up and managed by army, navy or air force of the Union of India• Eligible Employees of our company; and• All other persons eligible to invest under all applicable laws, rules, regulations and guidelines.Note: As per existing regulations, OCBs cannot participate in the Offer.The Equity Shares have not been, and will not be, registered under the United States Securities Act of 1933as amended (the “Securities Act”). The Equity Shares may not be offered, sold or delivered in the UnitedStates except pursuant to an exemption from, or in a transaction not subject to, the registration requirementsof the Securities Act. The Equity Shares are being offered by the Selling Shareholder: (i) in the UnitedStates, only to “qualified institutional buyers” as defined in, and pursuant to, Rule 144A (“Rule 144A”)under the Securities Act and (ii) outside the United States, in offshore transactions in reliance on RegulationS under the Securities Act (“Regulation S”). Purchasers are hereby notified that the Selling Shareholdermay be relying on the exemptions from the provisions of Section 5 of the Securities Act provided by Rule144A.Participation by associates of the BRLMs and the Syndicate MembersThe BRLMs and the Syndicate Members shall not be entitled to subscribe to the Offer in any manner excepttowards fulfilling their underwriting obligations. However, associates and affiliates of the BRLMs and theSyndicate Members are entitled to subscribe for Equity Shares in the Offer, either in the QIB Portion or inthe Non-Institutional Portion, as may be applicable to such investors. Such bidding and subscription may beon their own account or their clients.Bidders are advised to ensure that any single Bid from them does not exceed the investment limits ormaximum number of Equity Shares that can be held by them under applicable law.Bids by Mutual FundsProcedure for Application by Mutual FundsUnder the SEBI ICDR Regulations, 5% of the QIB Portion, i.e. 12,349,500 Equity Shares have beenspecifically reserved for Mutual Funds to be allocated on a proportionate basis. An eligible Bid by a MutualFund in the Mutual Fund Portion shall first be considered for allocation proportionately in the Mutual FundPortion. In the event that the demand in the Mutual Fund Portion is greater than 12,349,500 Equity Shares,allocation shall be made to Mutual Funds proportionately, to the extent of the Mutual Fund Portion. Theremaining demand by the Mutual Funds shall, as part of the aggregate demand by QIBs, be available forallocation proportionately out of the remainder of the QIB Portion, after excluding the allocation in theMutual Fund Portion.As per the current regulations, the following restrictions are applicable for investments by mutual funds:• No mutual fund scheme shall invest more than 10% of its net asset value in the Equity Shares orequity related instruments of any company provided that the limit of 10% shall not be applicablefor investments in index funds or sector or industry specific funds. No mutual fund under all itsschemes should own more than 10% of any company‘s paid-up share capital carrying votingrights.• The Bids made by asset management companies or custodians of Mutual Funds shall clearlyindicate the name of the concerned scheme for which Application is being made.Multiple Applications193

In case of a mutual fund, a separate Bid can be made in respect of each scheme of the mutual fundregistered with SEBI and such Bids in respect of more than one scheme of the mutual fund will not betreated as multiple Applications provided that the Bids clearly indicate the scheme concerned for which theBid has been madeBids by Eligible NRIsEligible NRIs are required to note the following:• Bid cum Application Forms (blue in color) have been made available for NRIs at our RegisteredOffice as well as by the members of the Syndicate and the Registrar to the Offer.• Eligible NRIs may please note that only such Applications as are accompanied by payment in freeforeign exchange or by debit to their NRE or FCNR accounts shall be considered for Allotment.The NRIs who intend to make payment through Non-Resident Ordinary (NRO) accounts shall usethe Bid cum Application Form meant for Resident Indians (white in color).• Eligible NRIs may also use the ASBA facility to make an Application by using ASBA Bid CumApplication Form (green in color), by indicating the appropriate category in the ASBA Bid CumApplication Form.• ASBA Bid cum Application Forms are available at the Registered Office and the SCSBs.Bids by FIIsAs per the current regulations, the following restrictions are applicable for investments by FIIs:The offer of Equity Shares to a single FII should not exceed 10% of our paid up capital (i.e. 4,136,626,500Equity Shares). In respect of an FII investing in our Equity Shares on behalf of its sub-accounts, theinvestment on behalf of each sub-account shall not exceed 10% of our total issued capital or 5% of our totalissued capital in case such sub-account is a foreign corporate or an individual. As of now, in accordancewith the foreign investment limits applicable to us, the total foreign investment including FII investmentcannot exceed 24% of our total issued capital unless approved by the shareholders of our Company.Subject to compliance with all applicable Indian laws, rules, regulations guidelines and approvals in termsof Regulation 15A(1) of the SEBI (Foreign Institutional Investors) Regulations 1995, as amended, by theSEBI (Foreign Institutional Investors)(Amendment) Regulations, 2008 (“SEBI FII Regulations”), an FII,as defined in the SEBI FII Regulations, or its sub account may issue, deal or hold, off shore derivativeinstruments (defined under the SEBI FII Regulations, as any instrument, by whatever name called, which isissued overseas by a foreign institutional investor against securities held by it that are listed or proposed tobe listed on any recognized stock exchange in India, as its underlying) directly or indirectly, only in theevent (i) such offshore derivative instruments are issued only to persons who are regulated by anappropriate foreign regulatory authority; and (ii) such offshore derivative instruments are issued aftercompliance with ‘know your client’ norms. The FII or sub-account is also required to ensure that no furtherissue or transfer of any offshore derivative instrument issued by it is made to any persons that are notregulated by an appropriate foreign regulatory authority as defined under the SEBI FII Regulations.Associates and affiliates of the underwriters including the BRLMs and the Syndicate Members that are FIIsmay issue offshore derivative instruments against Equity Shares Allotted to them in the Offer.Bids by SEBI registered Venture Capital Funds and Foreign Venture Capital InvestorsAs per the current regulations, the following restrictions are applicable for SEBI registered VentureCapital Funds and Foreign Venture Capital Investors:The SEBI (Venture Capital) Regulations, 1996 and the SEBI (Foreign Venture Capital Investor)Regulations, 2000 prescribe investment restrictions on venture capital funds and foreign venture capitalinvestors, respectively, registered with SEBI. Accordingly, the holding in any company by any individualventure capital fund or foreign venture capital investor registered with SEBI should not exceed 25% of thecorpus of the venture capital fund/foreign venture capital investor. However, venture capital funds andforeign venture capital investors may invest not more than 33.33% of their respective investible funds in194

various prescribed instruments, including in initial public offers. Further, FVCIs investing in the Offershould confirm that no approvals from the appropriate regulatory authorities are required to be obtained bythe concerned FVCI.Bids by Eligible EmployeesEligible Employees are required to note the following:• The sole/First Bidder shall be an Eligible Employee.• Bid cum Application Forms (pink in color) have been made available for Eligible Employees atour Registered Office as well as by the members of the Syndicate and the Registrar to the Offer.• Eligible Employees who are also Eligible NRIs may please note that only such Applications as areaccompanied by payment in free foreign exchange or by debit to their NRE or FCNR accountsshall be considered for Allotment. The Eligible Employees who are also Eligible NRIs, who intendto make payment through Non-Resident Ordinary (NRO) accounts shall put in their bids asresidents.• Eligible Employees may also use the ASBA facility to make an Application by using ASBA BidCum Application Form (green in color), by indicating the appropriate category in the ASBA BidCum Application Form.• ASBA Bid cum Application Forms are available at the Registered Office and the SCSBs.• Eligible Employees should ensure to fill out the Employee Number at the appropriate box in theBid cum Application Form for Eligible Employees/ ASBA Bid cum Application Form for EligibleEmployees.Bids by SEBI registered Venture Capital Funds and Foreign Venture Capital InvestorsAs per the current regulations, the following restrictions are applicable for SEBI registered VentureCapital Funds and Foreign Venture Capital Investors:The SEBI (Venture Capital) Regulations, 1996 and the SEBI (Foreign Venture Capital Investor)Regulations, 2000 prescribe investment restrictions on venture capital funds and foreign venture capitalinvestors, respectively, registered with SEBI. Accordingly, the holding in any company by any individualventure capital fund or foreign venture capital investor registered with SEBI should not exceed 25% of thecorpus of the venture capital fund/foreign venture capital investor. However, venture capital funds andforeign venture capital investors may invest not more than 33.33% of their respective investible funds invarious prescribed instruments, including in initial public offers. Further, FVCIs investing in the Offershould confirm that all approvals from appropriate regulatory authorities have been obtained by theconcerned FVCI.The above information is given for the benefit of the Bidders. Our Company, the Selling Shareholderand the BRLMs are not liable for any amendments or modification or changes in applicable laws orregulations, which may occur after the date of this Red Herring Prospectus. Bidders are advised tomake their independent investigations and ensure that the number of Equity Shares Bid for do notexceed the applicable investment limits under laws or regulations or maximum number of EquityShares that can be held by them under applicable laws.Maximum and Minimum Bid Size(a)For Retail Individual Bidders: The Bid must be for a minimum of One Bid Lot, so as to ensurethat the Bid Amount payable by the Bidder does not exceed Rs. 100,000. In case of revision ofBids, the Retail Individual Bidders have to ensure that the Bid Amount does not exceed Rs.100,000. In case the Bid Amount is over Rs. 100,000 due to revision of the Bid or revision of thePrice Band or on exercise of cut-off option, the Bid would be considered for allocation under theNon-Institutional Portion. The option to Bid at Cut-off Price is an option given to the Retail195

Individual Bidders indicating their agreement to Bid and purchase at a discount of Rs. [•] to theOffer Price as determined at the end of the Book Building Process.(b)For Other Bidders (Non-Institutional Bidders and QIBs bidding in the QIB Portion): TheBid must be for a minimum of such number of Bid Lots that the Bid Amount exceeds Rs. 100,000and in multiples of [●] Bid Lots thereafter. A Bid cannot be submitted for more than the OfferSize. However, the maximum Bid by a QIB investor should not exceed the investment limitsprescribed for them by applicable laws. Under existing SEBI ICDR Regulations, a QIB Bidderbidding in the QIB Portion cannot withdraw its Bid after the Bid/Offer Closing Date and isrequired to pay the QIB Margin Amount upon submission of Bid.In case of revision in Bids, the Non-Institutional Bidders have to ensure that the Bid Amount is greater thanRs. 100,000 for being considered for allocation in the Non-Institutional Portion. In case the Bid Amountreduces to Rs. 100,000 or less due to a revision in Bids or revision of the Price Band, Bids by Non-Institutional Bidders who are eligible for allocation in the Retail Portion would be considered for allocationunder the Retail Portion. Non-Institutional Bidders and QIBs are not allowed to Bid at “Cut-off‘.(c)For Employees bidding in the Employee Reservation Portion: The Bid must be for a minimum ofone Bid Lot and in multiples of one Bid Lot thereafter, so as to ensure that the Bid Amountpayable by the Bidder does not exceed Rs.100,000. Bidders in the Employee Reservation Portionhave the option to bid at the Cut-off Price indicating their agreement to Bid and purchase at adiscount of Rs. [•] to the Offer Price as determined at the end of the Book Building Process. TheAllotment in the Employee Reservation Portion will be on a proportionate basis, subject toallotment not exceeding Rs. 100,000 for each Eligible Employee.Bidders are advised to ensure that any single Bid from them does not exceed the investment limits ormaximum number of Equity Shares that can be held by them under applicable law or regulation or asspecified in this Red Herring ProspectusInformation for the Bidders:(a)(b)(c)(d)(e)(f)(g)The Red Herring Prospectus has been filed by Our Company with the RoC at least three daysbefore the Bid/Offer Opening Date.The members of the Syndicate will circulate copies of the Bid cum Application Form to potentialinvestors, and at the request of potential investors, copies of the Red Herring Prospectus.Our Company, on behalf of the Selling Shareholder, and the BRLMs shall declare the Bid/OfferOpening Date and Bid/Offer Closing Date at the time of filing of the Red Herring Prospectus withthe RoC and the same shall also be published in two national newspapers with wide circulation(one in English and one in Hindi). Hindi is also the regional language of the state of HimachalPradesh.The Members of the Syndicate shall accept Bids from the Bidder during the Bidding Period inaccordance with the terms of the Syndicate Agreement.Any investor (who is eligible to invest in our Equity Shares) who would like to obtain the RedHerring Prospectus and/ or the Bid cum Application Form can obtain the same from our RegisteredOffice or from any of the members of the Syndicate.Eligible investors who are interested in subscribing to the Equity Shares should approach any ofthe BRLMs or the Syndicate Members or their authorized agent(s) to register their Bids.The Bids should be submitted on the prescribed Bid cum Application Form only. Bid cumApplication Forms should bear the stamp of the members of the Syndicate. Bid cum ApplicationForms, which do not bear the stamp of the members of the Syndicate, will be rejected.Method and Process of Bidding(a)Our Company, the Selling Shareholders and the BRLMs shall declare the Bid/Offer Opening Date196

and Bid/Offer Closing Date at the time of filing the Red Herring Prospectus with RoC and thesame shall also be published in two national newspapers with wide circulation (one in English andone in Hindi). Hindi is also the regional language of the state of Himachal Pradesh. Thisadvertisement, subject to the provisions of Section 66 of the Companies Act shall be in the formatprescribed in Schedule XIII of the SEBI ICDR Regulations.(b)(c)(d)(e)(f)(g)(h)(i)The Price Band and the minimum Bid lot size for the Offer will be decided by our Company andthe Selling Shareholder in consultation with the BRLMs, and the same shall also be published intwo national newspapers with wide circulation (one in English and one in Hindi). Hindi is also theregional language of the state of Himachal Pradesh. The BRLMs and the Syndicate Members shallaccept Bids from Bidders during the Bidding Period in accordance with the terms of the SyndicateAgreement.Investors who are interested in subscribing to the Equity Shares should approach any of themembers of the Syndicate or their authorized agents to register their Bids, during the BiddingPeriod. The Members of the Syndicate shall accept Bids from all the other Bidders, except QIBBidders, and shall have the right to vet the Bids, during the Bidding Period in accordance with theterms of the Syndicate Agreement and Red Herring Prospectus.The Bidding Period shall be for a minimum of three Working Days and not exceeding 10 WorkingDays (including the days for which the Bid/Offer is open in case of revision in Price Band). In casethe Price Band is revised, the revised Price Band and the Bidding Period shall be published in twonational newspapers with wide circulation (one in English and one in Hindi). Hindi is also theregional language of the state of Himachal Pradesh.Each Bid cum Application Form will give the Bidder the choice to Bid for up to three optionalprices (for details see “Bids at Different Price Levels” below, within the Price Band and specifythe demand (i.e., the number of Equity Shares Bid for) in each option. The price and demandoptions submitted by the Bidder in the Bid cum Application Form will be treated as optionaldemands from the Bidder and will not be cumulated. After determination of the Offer Price, themaximum number of Equity Shares Bid for by a Bidder at or above the Offer Price will beconsidered for allocation/Allotment and the rest of the Bid(s), irrespective of the Bid Amount, willbecome automatically invalid.The Bidder cannot Bid on another Bid cum Application Form after Bids on one Bid cumApplication Form have been submitted to any member of the Syndicate. Submission of a secondBid cum Application Form to either the same or to another member of the Syndicate will be treatedas multiple Applications and is liable to be rejected either before entering the Bid into theelectronic bidding system, or at any point of time prior to the allocation or Allotment of EquityShares in the Offer. However, the Bidder can revise the Bid through the Revision Form, theprocedure for which is detailed in the “Build up of the Book and Revision of Bids” on page 201.The Members of the Syndicate will enter each Bid option into the electronic bidding system as aseparate Bid and generate a Transaction Registration Slip (“TRS”), for each price and demandoption and give the same to the Bidder. Therefore, a Bidder can receive up to three TRSs for eachBid cum Application Form.Along with the Bid cum Application Form, all Bidders will make payment in the manner describedunder the paragraph titled “Terms of Payment and Payment into the Escrow Account(s)” on page199.The identity of QIB Bidders shall not be made public.Bids at Different Price Levels(a)The Price Band has been fixed at Rs. [•] to Rs. [•] per Equity Share of Rs. 10 each, Rs. [•] beingthe Floor Price and Rs. [•] being the Cap Price. The Price Band and the minimum bid lot will bedecided by our company and the Selling Shareholder in consultation with the BRLMs and will bepublished in all editions of Indian Express and all editions of Jansatta at least two (2) WorkingDays prior to the Bid/Offer Opening Date. The Bidders can Bid at any price within the Price Band,197

in multiples of Re. 1.(b)(c)(d)(e)Our Company and the Selling Shareholder in consultation with the BRLMs reserves the right torevise the Price Band, during the Bidding Period, in accordance with the SEBI ICDR Regulationsprovided that the Cap Price shall be less than or equal to 120% of the Floor Price and the FloorPrice shall not be less than the face value of the Equity Shares. The revision in Price Band shall notexceed 20% on either side i.e. Floor Price can move up and down to the extent of 20% of the FloorPrice as disclosed in the Red Herring Prospectus.In case of revision in the Price Band, the Bidding Period will be extended for at least threeWorking Days subject to total Bidding Period of a maximum of 10 Working Days. Any revision inthe Price Band and the revised Bidding Period, if applicable, will be widely disseminated bynotification to the Stock Exchanges and SCSBs, by issuing a public notice in two widely circulatednewspapers, one each in English and Hindi, and also by indicating the change on the websites ofthe BRLMs and at the terminals of the Syndicate Members. Hindi is also the regional language ofthe state of Himachal Pradesh.Our Company and the Selling Shareholder in consultation with the BRLMs can finalize the OfferPrice within the Price Band in accordance with this clause, without the prior approval of orintimation to the Bidders.The Bidder can Bid at any price within the Price Band. The Bidder has to Bid for the desirednumber of Bid Lots at a specific price. Retail Individual Bidders applying for a maximum Bid inany of the bidding options not exceeding Rs. 100,000 may Bid at Cut-off Price. However, biddingat Cut-off Price is prohibited for QIB or Non-Institutional Bidders and such Bids from QIBs andNon-Institutional Bidders shall be rejected. Employee Discount will be applicable to all EligibleEmployees with a maximum bid in the Employee Reservation Portion being Rs. 100,000. RetailDiscount will be applicable to all Retail Individual Bidders with a maximum bid being Rs. 100,000(f)Retail Individual Bidders and Eligible Employees bidding under the Employee Reservation Portionwho Bid at the Cut-off Price agree that they shall purchase the Equity Shares at any price withinthe Price Band. Retail Individual Bidders and Eligible Employees bidding under the EmployeeReservation Portion bidding at Cut-off Price shall deposit the Bid Amount based on the Cap Pricein the Escrow Account(s).The Selling Shareholder in consultation with the BRLMS may decide to offer discount of Rs.[•] tothe Offer Price determined pursuant to the completion of the Book Building Process to the EligibleEmployees and Retail Individual Bidders(g)(h)In case of an upward revision in the Price Band announced as above, Retail Individual Bidders andEligible Employees bidding under the Employee Reservation Portion who had Bid at Cut-off Pricecould either (i) revise their Bid or (ii) make additional payment based on the revised Cap Price(such that the total amount i.e., original Bid Amount plus additional payment does not exceed Rs.100,000 for Retail Individual Bidders and Eligible Employees bidding under the EmployeeReservation Portion bidding at the Cut-off Price, if the Bidder wants to continue to Bid at Cut-offPrice), with the Syndicate Members to whom the original Bid was submitted. In case the totalamount (i.e., original Bid Amount plus additional payment) exceeds Rs. 100,000 for RetailIndividual Bidders bidding at the Cut-off Price the Bid will be considered for allocation under theNon-Institutional Portion in terms of the RHP. If, however, the Bidder does not either revise theBid or make additional payment and the Offer Price is higher than the Cap Price prior to revision,the number of Equity Shares Bid for shall be adjusted downwards for the purpose of Allotment,such that the no additional payment would be required from the Bidder and the Bidder is deemedto have approved such revised Bid at Cut-off Price.In case of a downward revision in the Price Band, announced as above, Retail Individual Biddersand Eligible Employees bidding under the Employee Reservation Portion who have Bid at Cut-offPrice could either revise their Bid or the excess amount paid at the time of bidding would berefunded from the Refund Account.198

(i)(j)In the event of any revision in the Price Band, whether upwards or downwards, the minimumApplication size shall remain one Bid Lot irrespective of whether the Bid Amount payable on suchminimum Application is not in the range of Rs. 5,000 to Rs. 7,000.When a Bidder has revised his or her Bid, he or she shall surrender the earlier TRS and get arevised TRS from the members of the Syndicate. It is the Bidder’s responsibility to request for andobtain the revised TRS, which will act as proof of his or her having revised the previous Bid.Terms of Payment and Payment into the Escrow Account(s)Each Bidder shall provide the applicable Margin Amount, with the submission of the Bid cum ApplicationForm by drawing a cheque or demand draft for the Bid Amount in favor of the Escrow Account(s) of theEscrow Collection Bank(s) (for details see “Offer Procedure-Payment Instructions” on page 208), andsubmit the same to the member of the Syndicate to whom the Bid is being submitted. Bid cum ApplicationForms accompanied by cash/ money order shall not be accepted. The Bidder may also provide theapplicable Margin Amount by way of an electronic transfer of funds through the RTGS mechanism. In casethe Margin Amount is paid through cheque/demand draft, each QIB shall provide its Margin Amount onlyto the BRLMs and their affiliates. In case of payment of Margin Amount through RTGS, each QIB shallmake the payment directly to the Escrow Collection Bank(s) in the designated account. The MarginAmount based on the Bid Amount has to be paid at the time of the submission of the Bid cum ApplicationForm. The Margin Amount shall be entered and printed on the TRS which shall be furnished upon request.The members of the Syndicate shall deposit the cheque or demand draft with the Escrow CollectionBank(s), which will hold such monies for the benefit of the Bidders until the Designated Date. On theDesignated Date, the Escrow Collection Bank(s) shall transfer the funds equivalent to the size of the Offerfrom the Escrow Account(s), as per the terms of the Escrow Agreement, into the Public Offer Account withthe Banker(s) to the Offer. The balance amount after transfer to the Public Offer Account shall be held forthe benefit of the Bidders who are entitled to refunds. No later than 15 days from the Bid/Offer ClosingDate, the Registrar to the Offer shall dispatch all refund amounts payable to unsuccessful Bidders and alsothe excess amount paid on bidding, if any, after adjustment for Allotment to the Bidders.Each category of Bidders i.e., QIB Bidders, Non-Institutional Bidders, Retail Individual Bidders, EligibleEmployees would be required to pay their applicable Margin Amount, as the case may be, at the time of thesubmission of the Bid cum Application Form. The Margin Amount payable by each category of Bidders ismentioned under the “Offer Structure” on page 185. Where the Margin Amount applicable to the Bidder isless than 100% of the Bid Amount, any difference between the amount payable by the Bidder for EquityShares transferred at the Offer Price and the Margin Amount paid at the time of Bidding, shall be payableby the Bidder no later than the Pay-in-Date. If the payment is not made favoring the Escrow Account(s)within the time stipulated above, the Bid of the Bidder is liable to be rejected.Where the Bidder has been allocated lesser number of Equity Shares than he or she had Bid for, the excessamount paid on Bidding, if any, after adjustment for allocation/ transfer, will be refunded to such Bidderwithin 15 days from the Bid/Offer Closing Date, failing which the Selling Shareholder shall pay interest at15% per annum for any delay beyond the periods as mentioned above.Electronic Registration of Bids(a)(b)(c)The members of the Syndicate will register the Bids received, using the on-line facilities of theStock Exchanges. There will be at least one on-line connectivity in each city, where the StockExchanges are located in India and where such Bids are being accepted.The Stock Exchanges will offer a screen-based facility for registering such Bids for the Offer. Thisfacility will be available on the terminals of the members of the Syndicate and their authorizedagents during the Bidding Period. The Syndicate Members can also set up facilities for off-lineelectronic registration of Bids subject to the condition that it will subsequently upload the off-linedata file into the on-line facilities for book building on a half hourly basis.On the Bid/Offer Closing Date, the members of the Syndicate shall upload the Bids till such timeas may be permitted by the Stock Exchanges. This information will be available with the BRLMson a regular basis. Bidders are cautioned that a high inflow of bids typically experienced on the199

last day of the Bidding may lead to some Bids received on the last day not being uploaded due toinsufficient uploading time, and such bids that are not uploaded will not be considered forallocation. Bids will only be accepted on Working Days, i.e., Monday to Friday (excluding anypublic holiday).(d)(e)The aggregate demand and price for Bids registered on the electronic facilities of the StockExchanges will be uploaded on a regular basis, consolidated and displayed on-line at all biddingcenters and the website of the Stock Exchanges. A graphical representation of consolidateddemand and price would be made available at the bidding centers and at the websites of each of theStock Exchanges during the Bidding Period.At the time of registering each Bid, the members of the Syndicate shall enter the following detailsof the investor in the on-line system:• Name of the investor. Bidders should ensure that the name given in the Bid cum ApplicationForm is exactly the same as the name in which the Depositary Account is held. In case the Bidcum Application Form is submitted in joint names, Bidders should ensure that the DepositoryAccount is also held in the same joint names and are in the same sequence in which theyappear in the Bid cum Application Form.• Investor Category – Individual, Corporate, Eligible NRI, FII, or Mutual Fund, QIBs, etc.• Numbers of Equity Shares Bid for.• Bid Amount.• Bid cum Application Form number.• Whether Margin Amount has been paid upon submission of Bid cum Application Form.• DP ID and Client ID of the beneficiary account of the Bidder.(f)(g)A system generated TRS will be given to the Bidder as a proof of the registration of each of thebidding options. It is the Bidder’s responsibility to obtain the TRS from the members of theSyndicate. The registration of the Bid by the member of the Syndicate does not guarantee that theEquity Shares shall be allocated/ Allotted.Such TRS will be non-negotiable and by itself will not create any obligation of any kind.(h)(i)(j)In the case of QIB Bidders, members of the Syndicate also have the right to accept the Bid orreject it. However, such rejection should be made at the time of receiving the Bid and only afterassigning a reason for such rejection in writing. In case of Non-Institutional Bidders, RetailIndividual Bidders and Eligible Employees, Bids would not be rejected except on the technicalgrounds listed in the “Offer Procedure-Grounds for Technical Rejections” on page 211.The permission given by the Stock Exchanges to use their network and software of the Online IPOsystem should not in any way be deemed or construed to mean that the compliance with variousstatutory and other requirements by our Company, and/or the BRLMs are cleared or approved bythe Stock Exchanges; nor does it in any manner warrant, certify or endorse the correctness orcompleteness of any of the compliance with the statutory and other requirements nor does it takeany responsibility for the financial or other soundness of our Company, our Promoters, ourmanagement or any scheme or project of our Company.It is also to be distinctly understood that the approval given by the Stock Exchanges should not inany way be deemed or construed that this Red Herring Prospectus has been cleared or approved bythe Stock Exchanges; nor does it in any manner warrant, certify or endorse the correctness orcompleteness of any of the contents of this Red Herring Prospectus; nor does it warrant that theEquity Shares will be listed or will continue to be listed on the BSE and the NSE.200

(k)Only Bids that are uploaded on the online IPO system of the NSE and the BSE shall be consideredfor allocation/ Allotment. In case of discrepancy of data between the BSE or the NSE and themembers of the Syndicate, the decision of the BRLMs based on the physical records of BidApplication Forms shall be final and binding on all concerned.Build Up of the Book and Revision of Bids(a)(b)(c)(d)(e)(f)(g)(h)Bids registered by various Bidders, through the members of the Syndicate shall be electronicallytransmitted to the Stock Exchanges mainframe on a regular basis.The book gets built up at various price levels. This information will be available with the BRLMson a regular basis.During the Bidding Period, any Bidder who has registered his or her interest in the Equity Sharesat a particular price level is free to revise his or her Bid within the Price Band using the printedRevision Form, which is a part of the Bid cum Application Form.Revisions can be made in both the desired number of Equity Shares and the Bid Amount by usingthe Revision Form. Apart from mentioning the revised options in the Revision Form, the Biddermust also mention the details of all the options in his or her Bid cum Application Form or earlierRevision Form. For example, if a Bidder has Bid for three options in the Bid cum ApplicationForm and he is changing only one of the options in the Revision Form, he must still fill the detailsof the other two options that are not being revised, in the Revision Form. The members of theSyndicate will not accept incomplete or inaccurate Revision Forms.The Bidder can make this revision any number of times during the Bidding Period. However, forany revision(s) in the Bid, the Bidders will have to use the services of the same member of theSyndicate through whom he or she had placed the original Bid. Bidders are advised to retain copiesof the blank Revision Form and the revised Bid must be made only in such Revision Form orcopies thereof.Any revision of the Bid shall be accompanied by payment in the form of cheque or demand draftfor the incremental amount, if any, to be paid on account of the upward revision of the Bid. Theexcess amount, if any, resulting from downward revision of the Bid would be returned to theBidder at the time of refund in accordance with the terms of this Red Herring Prospectus. In caseof QIB Bidders in the QIB Portion, the members of the Syndicate shall collect the payment in theform of cheque or demand draft or the electronic transfer of funds through RTGS for theincremental amount in the QIB Margin Amount, if any, to be paid on account of the upwardrevision of the Bid at the time of one or more revisions by the QIB Bidders.When a Bidder revises his or her Bid, he or she shall surrender the earlier TRS and get a revisedTRS from the members of the Syndicate. It is the responsibility of the Bidder to request for andobtain the revised TRS, which will act as proof of his or her having revised the previous Bid.Only Bids that are uploaded on the online IPO system of the Stock Exchanges shall be consideredfor allocation/ Allotment. In case of discrepancy of data between the BSE or the NSE and themembers of the Syndicate, the decision of the BRLMs based on the physical records of BidApplication Forms shall be final and binding on all concerned.Price Discovery and Allocation(a)(b)After the Bid/Offer Closing Date, the BRLMs will analyze the demand generated at various pricelevels and discuss pricing strategy with our Company and the Selling Shareholder.Our Company and the Selling Shareholder in consultation with the BRLMs shall finalize the OfferPrice. The Selling Shareholder in consultation with the BRLMs shall finalize, the Retail andEmployee Discount.201

(c)(d)(e)(f)(h)(i)(j)The allocation under the Employee Reservation Portion would be on a proportionate basis, in themanner specified in the SEBI ICDR Regulations and the RHP, subject to valid Bids being receivedat or above the Offer Price.Any unsubscribed portion/ unallocated portion in any reserved category shall be added to the NetOffer. In case of under-subscription in the Net Offer, spill-over to the extent of under-subscriptionshall be permitted from the reserved category to the Net Offer. However, if the aggregate demandby Mutual Funds in the Mutual Fund Portion is less than 12,349,500 Equity Shares, the balanceEquity Shares available for allocation in the Mutual Fund Portion will first be added to the QIBPortion and be Allotted proportionately to the QIB Bidders. If at least 60% of the Net Offer cannotbe allotted to QIBs, then the entire Application money will be refunded. In the event that theaggregate demand in the QIB Portion has been met, under subscription/ unallocated portion in anyother category, if any, would be allowed to be met with spill-over from other categories orcombination of categories at the discretion of our Company and the Selling Shareholders inconsultation with the BRLMs and the Designated Stock Exchange.Allocation to Eligible NRIs, FIIs and foreign venture capital funds registered with SEBI applyingon repatriation basis will be subject to applicable law and the terms and conditions stipulated bythe FIPB and RBI, while granting permission for Allotment of Equity Shares to them in the Offer.The BRLMs, in consultation with our Company and the Selling Shareholder shall notify themembers of the Syndicate of the Offer Price and allocations to their respective Bidders, where thefull Bid Amount has not been collected from the Bidders.In terms of the SEBI ICDR Regulations, QIBs bidding in the QIB Portion shall not be allowed towithdraw their Bid after the Bid/Offer Closing Date.Our Company and the Selling Shareholder in consultation with the BRLMs, reserves the right toreject any Bid procured from QIB Bidders. Rejection of Bids by QIBs bidding in the QIB Portion,if any will be made at the time of submission of Bids provided that the reasons for rejecting thesame shall be provided to such Bidder in writing. In case of Non-Institutional Bidders, RetailIndividual Bidders and Bids under the Employee Reservation Portion, our Company would have aright to reject the Bids only on technical grounds.The Allotment details shall be put on the website of the Registrar to the Offer.Signing of Underwriting Agreement and RoC Filing(a)(b)(c)Our Company, the Selling Shareholder, the BRLMs and the Syndicate Members shall enter into anUnderwriting Agreement on finalization of the Offer Price and allocation(s) /Allotment to theBidders.After signing the Underwriting Agreement, the updated Red Herring Prospectus will be filed byour Company with RoC, which then would be termed “Prospectus”. The Prospectus would havedetails of the Offer Price, Offer size, underwriting arrangements and would be complete in allmaterial respects.We have filed a copy of the RHP and will file a copy of the Prospectus with the RoC in terms ofSections 56, 60 and 60B of the Companies Act.Announcement of pre-Offer AdvertisementSubject to Section 66 of the Companies Act, our Company and the Selling Shareholder shall, after filing ofthe Red Herring Prospectus, publish an advertisement, in the format prescribed by the SEBI ICDRRegulations in two national newspapers with wide circulation (one in English and one in Hindi). Hindi isthe regional language of the state of Himachal Pradesh.Issuance of CAN(a)Upon approval of the basis of Allotment by the Designated Stock Exchange, the BRLMs or202

Registrar to the Offer shall send to the members of the Syndicate a list of their Bidders who havebeen allocated/ Allotted Equity Shares in the Offer. The approval of the basis of Allotment by theDesignated Stock Exchange for QIB Bidders may be done simultaneously with or prior to theapproval of the basis of Allotment for the Retail Individuals and Non-Institutional Bidders.However, investors should note that our Company and the Selling Shareholder shall ensure that theEquity Shares are Allotted to all investors in the Offer on the same date.(b)(c)(d)The BRLMs or the Syndicate Members would dispatch a CAN to their Bidders who have beenallocated Equity Shares in the Offer. The dispatch of a CAN shall be deemed a valid, binding andirrevocable contract for the Bidder to pay the entire Offer Price, for all the Equity Shares allocatedto such Bidder. QIB Bidders who have not paid the entire Bid Amount into the Escrow Account(s)at the time of bidding shall pay in full the amount payable into the Escrow Account(s) by the PayinDate specified in the CAN.Bidders who have been allocated Equity Shares and who have already paid the Bid Amount intothe Escrow Account(s) at the time of bidding shall directly receive the CAN from the Registrar tothe Offer subject, however, to realization of his or her cheque or demand draft paid into the EscrowAccount(s). The dispatch of a CAN shall be deemed a valid, binding and irrevocable contract forthe Bidder to pay the entire Offer Price for the Allotment to such Bidder.The Issuance of CAN is subject to and “Notice to QIBs: Allotment Reconciliation and RevisedCANs” as set forth belowNotice to QIBs: Allotment/Transfer Reconciliation and Revised CANAfter the Bid/Offer Closing Date, an electronic book will be prepared by the Registrar on the basis of Bidsuploaded on the BSE/NSE systems. This shall be followed by a physical book prepared by the Registrar onthe basis of the Bid cum Application Form received. Based on the electronic book or the Physical book asthe case may be, QIBs bidding in the QIB Portion may be sent a CAN, indicating the number of EquityShares that may be allocated to them. This provisional CAN and the final allocation is subject to (a) thebasis of final Allotment, which will be approved by the Designated Stock Exchange and reflected in thereconciled book prepared by the Registrar, (b) physical Application being valid in all respects along withstipulated documents being received by the Registrar to the Offer, and (c) allotment by the Board ofDirectors. Subject to the SEBI ICDR Regulations, certain Applications may be rejected due to technicalreasons, non-receipt of funds, cancellation of cheques, cheque bouncing, incorrect details, etc., and theserejected Applications will be reflected in the reconciliation and Basis of Allotment as approved by theDesignated Stock Exchange. As a result, a revised CAN may be sent to QIBs bidding in the QIB Portion,and the allocation of Equity Shares in such revised CAN may be different from that specified in the earlierCAN. QIBs should note that they may be required to pay additional amounts, if any, by the Pay-in Datespecified in the revised CAN, for any increased allocation of Equity Shares. The CAN shall constitute thevalid, binding and irrevocable contract (subject only to the issue of a revised CAN) for the QIB to pay theentire Offer Price for all the Equity Shares allocated to such QIB. Any revised CAN, if issued, willsupersede in entirety the earlier CAN.Designated Date and Allotment of Equity Shares(a)(b)(c)Our Company and the Selling Shareholder will ensure that the Allotment of Equity Shares is donewithin 15 days of the Bid/Offer Closing Date.After the funds are transferred from the Escrow Account(s) to the Public Offer Account on theDesignated Date, our Company will ensure the credit to the successful Bidders depository accountwithin two working days of the date of Allotment.In accordance with the SEBI ICDR Regulations, Equity Shares will be Allotted only in thedematerialized form to the Allottees. Allottees will have the option to re-materialize the EquityShares, if they so desire, as per the provisions of the Companies Act and the Depositories Act.Investors are advised to instruct their Depository Participant to accept the Equity Shares that may beAllotted to them pursuant to the Offer.203

General InstructionsDo’s:(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)Check if you are eligible to apply as per the terms of the Red Herring Prospectus and underapplicable laws, rules and regulations;Ensure that you have Bid within the Price Band;Read all the instructions carefully and complete the Resident Bid cum Application Form (white incolor) or non-resident Bid cum Application Form (blue in color), or ASBA Bid cum ApplicationForm (Green in color), or Employee Bid cum Application Form (pink in color), as the case maybe;Ensure that the details of Depository Participant and Beneficiary Account are correct (andactivated) as Allotment of Equity Shares will be in the dematerialized form only;Ensure that the Bids are submitted at the bidding centers only on forms bearing the stamp of amember of the Syndicate;Ensure that you have been given a TRS for all your Bid options;Submit revised Bids to the same member of the Syndicate through whom the original Bid wasplaced and obtain a revised TRS;Ensure that each of the Bidders should mention their Permanent Account Number (PAN) allottedunder the I.T. Act. Applications in which the PAN is not mentioned will be rejected, except forBids (i) on behalf of the GoI or State Government and the officials appointed by the courts, and (ii)(subject to SEBI circular dated April 3, 2008) from the residents of the state of Sikkim. ;Ensure that the Demographic Details (as defined below) are updated, true and correct in allrespects;Ensure that the name(s) given in the Bid cum Application Form is exactly the same as the name(s)in which the beneficiary account is held with the Depository Participant. In case the Bid cumApplication Form is submitted in joint names, ensure that the beneficiary account is also held insame joint names and such names are in the same sequence in which they appear in the Bid cumApplication Form;Ensure that the bank account details of the Bidder are mentioned in the space provided in the Bidcum Application Form; andMention the category under which the Application is being made in the Bid cum Application Formor the ASBA Bid cum Application Form as the case may be.Don’ts:(a)(b)(c)(d)(e)(f)Do not Bid for lower than the minimum Bid size;Do not Bid/revise Bid Amount to less than the Floor Price or higher than the Cap Price;Do not Bid on another Bid cum Application Form after you have submitted a Bid to the membersof the Syndicate;Do not pay the Bid Amount in cash, by money order or by postal order or by stockinvest;Do not send Bid cum Application Forms by post; instead submit the same to a member of theSyndicate only;Do not Bid at Cut-off Price (for QIB Bidders and Non-Institutional Bidders);204

(g)(h)(i)(j)Do not Bid for such number of Equity Shares that exceeds the Offer Size and/ or investment limitor maximum number of Equity Shares that can be held under the applicable laws or regulations ormaximum amount permissible under the applicable regulations;Do not submit the Bid without the applicable Margin Amount;Do not Bid for amount exceeding Rs. 100,000 in case of a Bid by Retail IndividualBidders/Eligible Employees.Do not submit the GIR number instead of the PAN as the Bid is liable to be rejected on thisground.Instructions for Completing the Bid cum Application FormBidders can obtain Bid cum Application Forms and/or Revision Forms from the members of the Syndicateor the Registered Office of our Company or the Registrar to the Offer.Bids and Revisions of BidsBids and revisions of Bids must be:(a)(b)(c)(d)(e)(f)(g)(h)Made only in the prescribed Bid cum Application Form or Revision Form, as applicable (White forResident Indians and Eligible NRIs applying on a non-repatriation basis, Blue for Eligible NRIsand FIIs applying on a repatriation basis, Green for ASBA Bidders, and Pink for EligibleEmployees.Completed in full, in BLOCK LETTERS in ENGLISH and in accordance with the instructionscontained herein, in the Bid cum Application Form or in the Revision Form. Incomplete Bid cumApplication Forms or Revision Forms are liable to be rejected.The Cut-off option is an option given only to the Retail Individual Bidders and Eligible Employeesindicating their agreement to Bid and purchase at the final Offer Price as determined at the end ofthe Book Building Process.QIBs cannot withdraw their Bid after the Bid/Offer Closing Date.Bids by NRIs, FIIs and foreign venture capital funds registered with SEBI on a repatriation basisshall be in the names of individuals, or in the names of FIIs but not in the names of minors, OCBs,firms or partnerships, foreign nationals (excluding NRIs) or their nominees.In case of revision in Bids, the Non-Institutional Bidders, who are individuals, have to ensure thatthe Bid Amount is greater than Rs. 100,000 for being considered for allocation in the Non-Institutional Portion. In case the Bid Amount reduces to Rs. 100,000 or less due to a revision inBids or revision of the Price Band, such Bids by Non-Institutional Bidders would be considered forallocation under the Retail Portion. Non-Institutional Bidders and QIBs are not allowed to Bid atCut off Price.In single name or in joint names (not more than three, and in the same order as their DepositoryParticipant details).Thumb impressions and signatures other than in the languages specified in the Eighth Schedule tothe Constitution of India must be attested by a Magistrate or a Notary Public or a SpecialExecutive Magistrate under official seal.Bidders’ Bank DetailsBidders should note that on the basis of name of the Bidders, Depository Participant‘s name, DepositoryParticipant-Identification number and Beneficiary Account Number provided by them in the Bid cumApplication Form, the Registrar to the Offer will obtain from the Depository the demographic details205

including address, Bidders bank account details, MICR code and occupation (hereinafter referred to as“Demographic Details”). These Bank Account details would be used for giving refunds (including throughphysical refund warrants, direct credit, ECS/NECS, NEFT and RTGS) to the Bidders. Hence, Bidders areadvised to immediately update their Bank Account details as appearing on the records of the depositoryparticipant. Please note that failure to do so could result in delays in dispatch/ credit of refunds to Bidders atthe Bidders sole risk and neither the BRLMs nor the Registrar to the Offer nor the Escrow Collection Banksnor our Company nor the Selling Shareholder shall have any responsibility and undertake any liability forthe same. Hence, Bidders should carefully fill in their Depository Account details in the Bid cumApplication Form.Bidders Depository Account DetailsIT IS MANDATORY FOR ALL THE BIDDERS TO RECEIVE THEIR EQUITY SHARES INDEMATERIALISED FORM. ALL BIDDERS SHOULD MENTION THEIR DEPOSITORYPARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER ANDBENEFICIARY ACCOUNT NUMBER IN THE BID CUM APPLICATION FORM. INVESTORSMUST ENSURE THAT THE NAME GIVEN IN THE BID CUM APPLICATION FORM ISEXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. INCASE THE BID CUM APPLICATION FORM IS SUBMITTED IN JOINT NAMES, IT SHOULDBE ENSURED THAT THE DEPOSITORY ACCOUNT IS ALSO HELD IN THE SAME JOINTNAMES AND SUCH JOINT NAMES ARE IN THE SAME SEQUENCE IN WHICH THEYAPPEAR IN THE BID CUM APPLICATION FORM.These Demographic Details would be used for all correspondence with the Bidders including mailing of therefund orders /CANs /Allocation Advice and printing of Bank particulars on the refund order or makingrefunds electronically and the Demographic Details given by Bidders in the Bid cum Application Formwould not be used for any other purpose by the Registrar to the Offer. Hence the Bidders are advised toupdate their Demographic Details as provided to the DP and ensure they are true and correct.By signing the Bid cum Application Form, the Bidder would be deemed to have authorized the depositoriesto provide, upon request, to the Registrar to the Offer, the required Demographic Details as available on itsrecords.Refund orders (where refunds are not being made electronically)/Allocation Advice/CANs would bemailed at the address of the Bidder as per the Demographic Details received from the Depositories.Bidders may note that delivery of refund orders/allocation advice/CANs may get delayed if the sameonce sent to the address obtained from the depositories are returned undelivered. In such an event,the address and other details given by the Bidder in the Bid cum Application Form would be usedonly to ensure dispatch of refund orders. Please note that any such delay shall be at the Bidders solerisk and neither our Company, Selling Shareholder, Escrow Collection Bank(s) nor the Syndicateshall be liable to compensate the Bidder for any losses caused to the Bidder due to any such delay orliable to pay any interest for such delay. In case of refunds through electronic modes as detailed inthe RHP, Bidders may note that refunds may get delayed if bank particulars obtained from theDepository Participant are incorrect.In case no corresponding record is available with the Depositories, which matches three parameters,namely, names of the Bidders (including the order of names of joint holders), the Depository Participant‘sidentity and the beneficiary‘s identity, then such Bids are liable to be rejected.Our Company and the Selling Shareholder in their absolute discretion, reserve the right to permit the holderof the power of attorney to request the Registrar the Offer that for the purpose of printing particulars on therefund order and mailing of the refund order/CANs/allocation advice, the Demographic Details given on theBid cum Application Form should be used (and not those obtained from the Depository of the Bidder). Insuch cases, the Registrar to the Offer shall use Demographic Details as given in the Bid cum ApplicationForm instead of those obtained from the Depositories.Bids by Non Residents, Eligible NRIs, FIIs and Foreign Venture Capital Funds registered with SEBIon a repatriation basisBids and revision to Bids must be made:206

1. On the Bid cum Application Form or the Revision Form, as applicable NRIs applying on a nonrepatriationbasis; blue for Eligible NRIs, FVCIs and FIIs on a repatriation basis; green for ASBABidders and pink for Eligible Employees and completed in full in BLOCK LETTERS inENGLISH in accordance with the instructions contained therein.2. In a single name or joint names (not more than three).3. Eligible NRIs for a Bid Amount of up to Rs. 100,000 would be considered under the Retail Portionfor the purposes of allocation and Bids for a Bid Amount of more than Rs. 100,000 would beconsidered under Non-Institutional Portion for the purposes of allocation; by other eligible NonResident Bidders for a minimum of one Bid Lot and in Bid Lots thereafter such that the BidAmount exceeds Rs. 100,000.For further details, please refer to the “Offer Procedure - Maximum and Minimum Bid Size” on page 191.In the names of individuals, or in the names of FIIs but not in the names of minors, OCBs, firms orpartnerships, foreign nationals (excluding NRIs) or their nominees.Refunds, dividends and other distributions, if any, will be payable in Indian Rupees only and net ofbank charges and/or commission. In case of Bidders who remit money through Indian Rupee draftspurchased abroad, such payments in Indian Rupees will be converted into U.S. Dollars or any otherfreely convertible currency as may be permitted by the RBI at the rate of exchange prevailing at thetime of remittance and will be dispatched by registered post or if the Bidders so desire, will becredited to their NRE accounts, details of which should be furnished in the space provided for thispurpose in the Bid cum Application Form. Neither our Company nor the Selling Shareholder will beresponsible for loss, if any, incurred by the Bidder on account of conversion of foreign currency.Our Company has received all relevant approvals for the Offer of Equity Shares to Eligible NRI,FIIs, and foreign venture capital funds registered with SEBI other than approvals from the RBI. TheCompany has made an application to the RBI in order to obtain such approval. As per the RBIregulations, OCBs are not permitted to participate in the Offer.There is no reservation for Eligible NRIs, FIIs and Foreign Venture Capital Funds and all EligibleNRIs, FIIs and foreign venture capital funds applicants will be treated on the same basis with othercategories for the purpose of allocation.Bids under Power of AttorneyIn case of Bids made pursuant to a power of attorney or by limited companies, corporate bodies, registeredsocieties, a certified copy of the power of attorney or the relevant resolution or authority, as the case maybe, along with a certified copy of the Memorandum of Association and Articles of Association and/or byelaws of the limited company, corporate body, registered society, as the case may be, must be lodged alongwith the Bid cum Application Form. Failing this, our Company and the Selling Shareholder reserves theright to accept or reject any Bid in whole or in part, in either case, without assigning any reason thereof.In case of Bids made pursuant to a power of attorney by FIIs or FVCIs, a certified copy of the power ofattorney or the relevant resolution or authority, as the case may be, along with a certified copy of their SEBIregistration certificate must be lodged along with the Bid cum Application Form. Failing this, the SellingShareholder reserves the right to accept or reject any Bid in whole or in part, in either case, withoutassigning any reason thereof.In case of Bids made pursuant to a power of attorney by Mutual Funds, a certified copy of the power ofattorney or the relevant resolution or authority, as the case may be, along with a certified copy of their SEBIregistration certificate must be lodged along with the Bid cum Application Form. Failing this, the SellingShareholder reserves the right to accept or reject any Bid in whole or in part, in either case, withoutassigning any reason thereof.In case of Bids made by insurance companies registered with the Insurance Regulatory and DevelopmentAuthority, a certified copy of certificate of registration issued by Insurance Regulatory and DevelopmentAuthority must be lodged along with the Bid cum Application Form. Failing this, our Company and the207

Selling Shareholder reserves the right to accept or reject any Bid in whole or in part, in either case, withoutassigning any reason thereof.In case of Bids made by provident funds with minimum corpus of Rs. 250 million (subject to applicablelaw) and pension funds with minimum corpus of Rs. 250 million, a certified copy of certificate from achartered accountant certifying the corpus of the provident fund/pension fund must be lodged along withthe Bid cum Application Form. Failing this, our Company and the Selling Shareholder reserves the right toaccept or reject any Bid in whole or in part, in either case, without assigning any reason thereof.Our Company and the Selling Shareholder in their absolute discretion, reserves the right to relax the abovecondition of simultaneous lodging of the power of attorney along with the Bid cum Application form,subject to such terms and conditions that our Company, the Selling Shareholder and the BRLMs may deemfit.Payment InstructionsEscrow MechanismOur Company, the Selling Shareholder and the BRLMs and their affiliates shall open Escrow Account(s)with the Escrow Collection Bank(s) for the collection of the Bid Amount payable upon submission of theBid cum Application Form and for amounts payable pursuant to allocation/Allotment in the Offer.The Escrow Collection Banks will act in terms of the RHP, Prospectus and the Escrow Agreement. TheEscrow Collection Bank(s), for and on behalf of the Bidders, shall maintain the monies in the EscrowAccount. The Escrow Collection Bank(s) shall not exercise any lien whatsoever over the monies depositedtherein and shall hold the monies therein in trust for the Bidders. On the Designated Date, the EscrowCollection Bank(s) shall transfer the funds equivalent to the size of the Offer from the Escrow Account, asper the terms of the Escrow Agreement, into the Public Offer Account and Refund Account as per the termsof the Escrow Agreement, the RHP and Prospectus. The balance amount after transfer to the Public OfferAccount shall be held for the benefit of the Bidders who are entitled to refunds. Payments of refund to theBidders shall also be made from the Refund Account are per the terms of the Escrow Agreement and theRed Herring Prospectus and Prospectus.The Bidders should note that the escrow mechanism is not prescribed by SEBI and has been established asan arrangement between our Company, the Selling Shareholder, the members of the Syndicate, the EscrowCollection Bank(s) and the Registrar to the Offer to facilitate collections from the Bidders. Bidders shouldfurther note that they will not receive interest on the Margin Amount except as stated in the section titled“Interest in case of delay in dispatch of Allotment Letters/Refund Orders” on page 189.Under the terms of the escrow mechanism for this Offer, the Escrow Collection Banks would sweep themonies lying to the credit of the Escrow Accounts at the end of each day into a term deposit, or as mayotherwise be permitted under applicable law, operated by the Escrow Collection Banks, at an interest rate asmay be mutually agreed among the Escrow Collection Banks, in consultation with the Selling Shareholder.The procedures relating to the creation of such deposits and payment of interest monies, if any, thereonshall be set forth in the Escrow Agreement. The Bidders expressly agree that they shall not be entitled forany interest monies, if any, from such deposits and agree that these may be transferred to the SellingShareholder in such proportions as may be agreed by them with the Escrow Collection Banks and providedunder the escrow arrangement. Compliance shall be ensured at all times with all applicable laws includingtaxation laws and rules, regulations and guidelines of the RBI and SEBI as well as with the applicable termsand conditions governing such term deposits.Payment into Escrow Account(s)Each Bidder shall draw a cheque or demand draft or issue RTGS instructions for the amount payable on theBid and/or on allocation/Allotment as per the following terms:1. The Bidders for whom the applicable Margin Amount is equal to 100%, shall, with the submissionof the Bid cum Application Form, draw a payment instrument for the Bid Amount in favor of theEscrow Account(s) and submit the same to the members of the Syndicate.208

2. In case of QIBs bidding in the QIB Portion, where the margin is less than 100% of the BidAmount, the balance amount shall be paid by the Bidders into the Escrow Account(s) within theperiod specified in the CAN. If the payment is not made in favor of the Escrow Account within thestipulated time, the Bid is liable to be rejected.3. The payment instruments for payment into the Escrow Account should be drawn in favor of:• In case of resident QIB Bidders: “Escrow Account – SJVNL Public Offer – QIB – R”• In case of non-resident QIB Bidders: “Escrow Account – SJVNL Public Offer – QIB– NR”• In case of Resident Bidders: “Escrow Account – SJVNL Public Offer - R”• In case of Non Resident Bidders: “Escrow Account – SJVNL Public Offer – NR”• In case of Eligible Employees: “Escrow Account – SJVNL Public Offer – Employee- R”• In case of Eligible Employees who are also Eligible NRIs: “Escrow Account – SJVNLPublic Offer – Employee- NR”4. In case of Bids by NRIs applying on repatriation basis, the payments must be made through IndianRupee drafts purchased abroad or cheques or bank drafts, for the amount payable on Applicationsremitted through normal banking channels or out of funds held in Non-Resident External (NRE)Accounts or Foreign Currency Non-Resident (FCNR) Accounts, maintained with banks authorizedto deal in foreign exchange in India, along with documentary evidence in support of theremittance. Payment will not be accepted out of Non-Resident Ordinary (NRO) Account of Non-Resident Bidder bidding on a repatriation basis. Payment by drafts should be accompanied by bankcertificate confirming that the draft has been issued by debiting to NRE Account or FCNRAccount maintained with banks authorized to deal in foreign exchange in India.5. In case of Bids by FIIs or FVCIs, the payment should be made out of funds held in Special RupeeAccount along with documentary evidence in support of the remittance. Payment by drafts shouldbe accompanied by bank certificate confirming that the draft has been issued by debiting to SpecialRupee Account.6. Where a Bidder has been allocated/ Allotted a lesser number of Equity Shares than the Bidder hasBid for, the excess amount, if any, paid on bidding, after adjustment towards the balance amountpayable on the Equity Shares allocated will be refunded to the Bidder from the Refund Account.7. The monies deposited in the Escrow Account(s) will be held for the benefit of the Bidders till theDesignated Date.8. On the Designated Date, the Escrow Collection Banks shall transfer the funds from the EscrowAccount(s) as per the terms of the Escrow Agreement into the Public Offer Account with theBankers to the Offer.9. On the Designated Date and no later than 15 days from the Bid/Offer Closing Date, the SellingShareholder through the Registrar to the Offer shall effect refund of amounts payable tounsuccessful Bidders and also the excess amount paid on Bidding, if any, after adjusting forallocation/Allotment to the Bidders.10. Payments should be made by cheque, or demand draft drawn on any bank (including a CooperativeBank), which is situated at, and is a member of or sub-member of the bankers‘ clearinghouse located at the centre where the Bid cum Application Form is submitted or through RTGSpayment. Outstation cheques/bank drafts drawn on banks not participating in the clearing processwill not be accepted and Applications accompanied by such cheques or bank drafts are liable to berejected. Cash/ stockinvest/Money Orders/Postal orders will not be accepted.11. Bidders are advised to mention the number of Bid cum Application Form on the reverse of the209

cheque / demand draft to avoid misuse of instruments submitted along with the Bid cumApplication Form.12. In case clear funds are not available in the Escrow Accounts as per final certificates from theEscrow Collection Banks, such Bids are liable to be rejected.Under the terms of the escrow mechanism for this Issue, the Escrow Collection Banks would sweepthe monies lying to the credit of the Escrow Accounts at the end of each day into a term deposit, or asmay otherwise be permitted under applicable law, operated by the Escrow Collection Banks, at aninterest rate as may be mutually agreed among the Escrow Collection Banks, in consultation with theSelling Shareholder. The procedures relating to the creation of such deposits and payment of interestmonies, if any, thereon shall be set forth in the Escrow Agreement. The Bidders expressly agree thatthey shall not be entitled for any interest monies, if any, from such deposits and agree that these maybe transferred to the Selling Shareholder in such proportions as may be agreed by them with theEscrow Collection Banks and provided under the escrow arrangement. Compliance shall be ensuredat all times with all applicable laws including taxation laws and rules, regulations and guidelines ofthe RBI and SEBI as well as with the applicable terms and conditions governing such term deposits.Submission of Bid Cum Application FormAll Bid cum Application Forms or Revision Forms duly completed and accompanied by account payeecheques or drafts shall be submitted to the members of the Syndicate at the time of submission of the Bid.No separate receipts shall be issued for the money payable on the submission of Bid cum Application Formor Revision Form. However, the collection centre of the members of the Syndicate will acknowledge thereceipt of the Bid cum Application Forms or Revision Forms by stamping and returning to the Bidder theacknowledgement slip. This acknowledgement slip will serve as the duplicate of the Bid cum ApplicationForm for the records of the Bidder.Other InstructionsJoint Bids in the case of IndividualsBids may be made in single or joint names (not more than three). In the case of joint Bids, all payments willbe made out in favor of the Bidder whose name appears first in the Bid cum Application Form or RevisionForm. All communications will be addressed to the First Bidder and will be dispatched to his or her addressas per the Demographic Details received from the Depository.Multiple ApplicationsA Bidder should submit only one Bid cum Application Form or one ASBA Bid cum Application Form (andnot more than one) for the total number of Equity Shares required. Two or more Applications will bedeemed to be multiple Applications if the sole or First Bidder is one and the same. In case of a MutualFund, a separate Applications can be made in respect of each scheme of the mutual fund registered withSEBI and such Applications in respect of more than one scheme of the mutual fund will not be treated asmultiple Applications provided that the Applications clearly indicate the scheme concerned for which theBid has been made. Eligible Employees can apply under the Employee Reservation Portion and underapplicable category under the Net Offer. These applications will not be considered Multiple Applications.Our Company and the Selling Shareholder reserves the right to reject, in its absolute discretion, all or anymultiple Applications in any or all categories. In this regard, the procedures which would be followed bythe Registrar to the Offer to detect multiple Applications are given below:1. All Applications with the same name and age will be accumulated and taken to a separate processfile, which would serve as a multiple master.2. In this master, a check will be carried out for the same PAN. In cases where the PAN is different,the same will be deleted from this master.210

3. The Registrar to the Offer will obtain, from the depositories, details of the applicant‘s addressbased on the DP ID and Beneficiary Account Number provided in the Bid-cum-Application Formand create an address master.4. The addresses of all the Applications in the multiple master will be strung from the address master.This involves putting the addresses in a single line after deleting non-alpha and non-numericcharacters i.e. commas, full stops, hash etc. Sometimes, the name, the first line of address and pincode will be converted into a string for each Application received and a photo match will becarried out amongst all the Applications processed. A print-out of the addresses will be taken tocheck for common names. The Applications with same name and same address will be treated asmultiple Applications.5. The Applications will be scrutinized for DP ID and Beneficiary Account Numbers. In caseApplications bear the same DP ID and Beneficiary Account Numbers, these will be treated asmultiple Applications.6. Subsequent to the aforesaid procedures, a print out of the multiple master will be taken and theApplications physically verified to tally signatures as also father‘s/ husband‘s names. Oncompletion of this, the Applications will be identified as multiple Applications.Our Company and the Selling Shareholder reserves the right to reject, in its absolute discretion, all or anymultiple Applications in any or all categories.Permanent Account Number or PANExcept for Bids (i) on behalf of the GoI or State Government and the officials appointed by the courts, and(ii) (subject to the SEBI circular dated April 3, 2008) from residents of the state of Sikkim, each Biddershould mention his/her Permanent Account Number (“PAN”) allotted under the Income Tax Act, 1961 (“ITAct”).Applications without this information will be considered incomplete and are liable to be rejected. It is to bespecifically noted that Bidders should not submit the GIR number instead of the PAN, as the Bid isliable to be rejected on this ground.Unique Identification Number (“UIN”)Pursuant to circulars dated April 27, 2007 (No. MRD/DoP/Cir-05/2007) and June 25, 2007 (No.MRD/DoP/Cir-08/2007) issued by SEBI, the requirement of UIN under the SEBI (Central database ofMarket Participants) Regulations, 2005 has been discontinued and irrespective of the amount of transaction,PAN has been made the sole identification number for all participants in the securities market.Right to Reject BidsIn case of QIBs bidding in the QIB Portion, our Company and the Selling Shareholder in consultation withthe BRLMs may reject Bids provided that the reasons for rejecting the same shall be provided to suchBidder in writing at the time of rejection of Bids. In case of Non-Institutional Bidders, Retail IndividualBidders and Eligible Employees, our Company and the Selling Shareholder have a right to reject Bids basedon technical grounds. Consequent refunds shall be made through any of the modes described in the RedHerring Prospectus and will be sent to the Bidder‘s address at the Bidder‘s risk.Grounds for Technical RejectionsBidders are advised to note that Bids are liable to be rejected inter alia on the following technical grounds:1. Amount paid does not tally with the amount payable for the highest value of Equity Shares Bid for;2. Age of First Bidder not given;3. In case of partnership firms, Equity Shares may be registered in the names of the individualpartners and no firm as such shall be entitled to apply;4. Bid by persons not competent to contract under the Indian Contract Act, 1872 including minors,211

insane persons;5. PAN not stated or GIR number stated instead (except for Bids on behalf of the GoI or any StateGovernment and the officials appointed by the courts and (subject to the SEBI circular no.MRD/DoP/MF/Cir-08/2008 dated April 3, 2008) from residents of the state of Sikkim).;6. Bids for lower number of Equity Shares than specified for that category of investors;7. Bids at a price less than the Floor Price;8. Bids at a price more than the Cap Price;9. Bids at Cut off Price by Non-Institutional Bidders and QIB Bidders;10. Bids for number of Equity Shares which are not in multiples of [●];11. Category not ticked;12. Multiple Applications as described in the Red Herring Prospectus;13. In case of Bid under power of attorney or by limited companies, corporate, trust etc., relevantdocuments are not submitted;14. Bids accompanied by stockinvest/money order/postal order/cash;15. Signature of sole and/or joint Bidders missing;16. Bid cum Application Forms does not have the stamp of the BRLMs or the Syndicate Members;17. Bid cum Application Forms does not have Bidder‘s depository account details or the details givenare incomplete or incorrect;18. Bid cum Application Forms are not delivered by the Bidders within the time prescribed as per theBid cum Application Forms, Bid/Offer Opening Date advertisement and the Red HerringProspectus and as per the instructions in the Red Herring Prospectus and the Bid cum ApplicationForms;19. In case no corresponding record is available with the Depositories that matches three parametersnamely, names of the Bidders (including the order of names of joint holders), the DP ID and thebeneficiary‘s account number;20. Bids for amounts greater than the maximum permissible amounts prescribed by the regulations;21. Bids by QIBs not submitted through the BRLMs or their Affiliates;22. Bids by OCBs;23. Bids where clear funds are not available in the Escrow Accounts as per the final certificate fromthe Escrow Collection Banks;24. Bids not uploaded in the Book;25. Bids by QIB Bidders and Non-Institutional Bidders where the Bid Amount is in excess of Rs.100,000 uploaded after 3 P.M. on the Bid/Offer Closing Date;26. Revision of Bids by QIB Bidders and Non-Institutional Bidders where the Bid Amount is in excessof Rs. 100,000 uploaded after 4 P.M. on the Bid/Offer Closing Date;27. Bids by persons prohibited from buying, selling or dealing in the shares directly or indirectly by212

SEBI or any other regulatory authority;28. Bids by persons who are not eligible to acquire Equity Shares of our Company in terms of allapplicable laws, rules, regulations, guidelines and approvals;29. Bids that do not comply with the securities or overseas direct investment laws of their respectivejurisdictions;30. Bids by any persons outside India if not in compliance with applicable foreign and Indian laws;and31. Bids by any persons located in the United States other than “qualified institutional buyers” asdefined in Rule 144A under the Securities Act.Equity Shares in Dematerialized Form with NSDL or CDSLAs per the provisions of Section 68B of the Companies Act, the Allotment of Equity Shares in the Offershall be only in a de-materialised form, (i.e., not in the form of physical certificates but be fungible and berepresented by the statement issued through the electronic mode).In this context, two agreements have been signed among our Company, the respective Depositories and theRegistrar and Share Transfer Agent:(a)(b)Agreement dated April 6, 2010 among NSDL, our Company and the Registrar to the Offer;Agreement dated April 9, 2010 among CDSL, our Company and the Registrar to the Offer.All Bidders can seek Allotment only in dematerialized mode. Bids from any Bidder without relevant detailsof his or her depository account are liable to be rejected.(a)(b)(c)(d)(e)(f)(g)(h)A Bidder applying for Equity Shares must have at least one beneficiary account with either of theDepository Participants of either NSDL or CDSL prior to making the Bid. (Eligible NRI’s DPaccounts should have a “NRI” status recorded with depository).The Bidder must necessarily fill in the details (including the DP ID) appearing in the Bid cumApplication Form or Revision Form.Allotment to a successful Bidder will be credited in electronic form directly to the beneficiaryaccount (with the Depository Participant) of the Bidder.Names in the Bid cum Application Form or Revision Form should be identical to those appearingin the account details in the Depository. In case of joint holders, the names should necessarily be inthe same sequence as they appear in the account details in the Depository.If incomplete or incorrect details are given under the heading “Bidders Depository AccountDetails” in the Bid cum Application Form or Revision Form, it is liable to be rejected.The Bidder is responsible for the correctness of his or her Demographic Details given in the Bidcum Application Form vis-à-vis those with his or her Depository Participant.Equity Shares in electronic form can be traded only on the stock exchanges having electronicconnectivity with NSDL and CDSL. The Stock Exchanges where our Equity Shares are proposedto be listed have electronic connectivity with CDSL and NSDL.The trading of the Equity Shares of our Company would be in dematerialized form only for allinvestors in the demat segment of the respective Stock Exchanges.CommunicationsAll future communications in connection with Bids made in the Offer should be addressed to the Registrar213

to the Offer quoting the full name of the sole or First Bidder, Bid cum Application Form number, BiddersDepository Account Details, number of Equity Shares applied for, date of Bid form, name and address ofthe member of the Syndicate where the Bid was submitted and cheque or draft number and issuing bankthereof or the RTGS payment reference number.Investors can contact the Compliance Officer or the Registrar to the Offer in case of any pre-Offer or post-Offer related problems such as non-receipt of letters of Allotment, credit of shares allotted in the respectivebeneficiary accounts, refunds, etc.The Red Herring Prospectus, in so far as it relates to terms of the Offer should be read in conjunction withthe aforestated paragraphs, to the extent applicableImpersonationAttention of the applicants is specifically drawn to the provisions of sub-section (1) of Section 68 A ofthe Companies Act, which is reproduced below:"Any person who:(a)(b)makes in a fictitious name, an application to a company for acquiring or subscribing for, anyshares therein, orotherwise induces a company to allot, or register any transfer of shares, therein to him, orany other person in a fictitious name,shall be punishable with imprisonment for a term which may extend to five years."Basis of AllotmentA. For Retail Individual Bidders• Bids received from the Retail Individual Bidders at or above the Offer Price and at Cut-offshall be grouped together to determine the total demand under this category. The Allotment toall the successful Retail Individual Bidders will be made at the Offer Price.• The Net Offer size less Allotment to Non-Institutional and QIB Bidders shall be available forAllotment to Retail Individual Bidders who have Bid in the Offer at a price that is equal to orgreater than the Offer Price. The Allotment to all the successful Retail Individual Bidders willbe made at a discount of Rs.[•] to the Offer Price.• If the valid Bids in this category is less than or equal to [●] Bid Lots at or above the OfferPrice, full Allotment shall be made to the Retail Individual Bidders to the extent of their validBids.• If the valid Bids in this category is greater than [●] Bid Lots at or above the Offer Price, theAllotment shall be made on a proportionate basis up to a minimum of one Bid Lot and inmultiples of one (1) Equity Share thereafter. For the method of proportionate basis ofAllotment, refer below.B. For Non-Institutional Bidders• Bids received from Non-Institutional Bidders at or above the Offer Price shall be groupedtogether to determine the total demand under this category. The Allotment to all successfulNon-Institutional Bidders will be made at the Offer Price.• The Net Offer size less Allotment to QIBs Bidders and Retail Institutional Bidders shall beavailable for Allotment to Non-Institutional Bidders who have Bid in the Offer at a price thatis equal to or greater than the Offer Price.214

• If the valid Bids in this category is less than or equal to [●] Bid Lots at or above the OfferPrice, full Allotment shall be made to Non-Institutional Bidders to the extent of their demand.• In case the valid Bids in this category is greater than [●] Bid Lots at or above the Offer Price,Allotment shall be made on a proportionate basis up to a minimum of one Bid Lot and inmultiples of one (1) Equity Share thereafter. For the method of proportionate basis ofAllotment refer below.C. For QIBs in the QIB Portion• Bids received from the QIB Bidders in the QIB portion, at or above the Offer Price, shall begrouped together to determine the total demand under this portion. The Allotment to all theQIB Bidders will be made at the Offer Price.• The QIB Portion shall be available for Allotment to QIBs who have Bid in the Offer at a pricethat is equal to or greater than the Offer Price.• Allotment shall be undertaken in the following manner:(a) In the first instance allocation to Mutual Funds for up to 5% of the QIB Portion shall bedetermined as follows:(i)(ii)(iii)In the event that Mutual Fund Bids exceeds 5% of the QIB Portion, allocation toMutual Funds shall be done on a proportionate basis for 5% of the QIB Portion.In the event that the aggregate demand from Mutual Funds is less than 5% of theQIB Portion then all Mutual Funds shall get full Allotment to the extent of validBids received above the Offer Price.Equity Shares remaining unsubscribed, if any, not allocated to Mutual Funds shallbe available for Allotment to all QIBs as set out in (b) below;(b) In the second instance Allotment to all QIBs Bidders shall be determined as follows:(i)(ii)(iii)In the event of an oversubscription in the QIB Portion, all QIBs who havesubmitted Bids above the Offer Price shall be Allotted Equity Shares on aproportionate basis for up to 95% of the QIB Portion.Mutual Funds, who have received allocation as per (a) above, for less than thenumber of Equity Shares Bid for by them, are eligible to receive Equity Shares ona proportionate basis along with other QIB Bidders.Under-subscription below 5% of the QIB Portion, if any, in the Mutual FundPortion, would be included for allocation to the remaining QIB Bidders on aproportionate basis.• The aggregate allocation to QIB Bidders shall be at least 246,990,000 Equity Shares. Themethod of proportionate basis of allotment is stated below.D. For Employee Reservation Portion• Bids received from the Eligible Employees at or above the Offer Price shall be groupedtogether to determine the total demand under this category. The allocation to all the successfulEligible Employees will be made at the Offer Price.• If valid Bids in this category is less than or equal to [●] Bid Lots at or above the Offer Price,full Allotment shall be made to the Eligible Employees to the extent of their demand, subjectto a maximum allotment of Rs 100,000.215

• The Allotment to all the successful Eligible Employees will be made at a discount of Rs.[•] tothe Offer Price.• If valid Bids in this category is greater than [●] Bid Lots at or above the Offer Price, theAllotment shall be made on a proportionate basis up to a minimum of one Bid Lot and inmultiples of one (1) Equity Share thereafter, subject to a maximum allotment of Rs. 100,000.For the method of proportionate basis of allocation, see below.• Any unsubscribed or unallocated portion in the Employee Reservation Portion shall be addedback to the Net Offer before allocation to any unreserved category.Illustration of Allotment to QIBs and Mutual Funds (“MF”) in the QIB PortionOffer DetailsS. No. Particulars Offer details1 Offer size 200 million Equity Shares2 Allotment to QIB (60%) 120 million Equity SharesOf which:a. Reservation to MF (5%) 6 million Equity Sharesb. Balance for all QIBs including MFs 114 million Equity Shares3 No. of QIB applicants 104 No. of shares applied for 500 million Equity SharesB. Details of QIB BidsS. No Type of QIB bidders# No. of Equity Shares bid for (in millions)1 A1 502 A2 203 A3 1304 A4 505 A5 506 MF1 407 MF2 408 MF3 809 MF4 2010 MF5 20Total 500# A1-A5: (QIB bidders other than MFs), MF1-MF5 (QIB bidders which are Mutual Funds)C. Details of Allotment to QIB Bidders/ Applicants(Number of Equity Shares in million)Type of QIB bidders Shares bid for Allocation of 6 millionEquity Shares to MFproportionately (pleasesee note 2 below)Allocation of balance114 million EquityShares to QIBsproportionately (pleasesee note 4 below)Aggregate allocationto MFs(I) (II) (III) (IV) (V)A1 50 0 11.40 0A2 20 0 4.5 0A3 130 0 29.6 0216

A4 50 0 11.4 0A5 50 0 11.4 0MF1 40 1.2 9.1 10.3MF2 40 1.2 9.1 10.3MF3 80 2.4 18.2 20.6MF4 20 0.6 4.5 5.2MF5 20 0.6 4.5 5.2500 6 114 51.6Please note:1. The illustration presumes compliance with the requirements specified in this Red Herring Prospectus in “Offer Structure”on page 185.2. Out of 120 million equity shares allocated to QIBs, 6 million (i.e. 5%) will be allocated on proportionate basis among 5mutual fund applicants who applied for 200 shares in QIB category.3. The balance 114 million equity shares (i.e. 120 - 6 (available for mutual funds)) will be allocated on proportionate basisamong 10 QIB applicants who applied for 500 equity shares (including 5 mutual fund applicants who applied for 200equity shares).4. The figures in the fourth column titled “Allocation of balance 114 million equity shares to QIBs proportionately” in theabove illustration are arrived as under:• For QIBs other than mutual funds (A1 to A5)= No. of shares bid for (i.e. in column II) X 114 / 494• For mutual funds (MF1 to MF5)= [(No. of shares bid for (i.e. in column II of the table above) less equity sharesallotted ( i.e., column III of the table above)] X 114/494• The numerator and denominator for arriving at allocation of 114 million shares to the 10 QIBs are reduced by 6million shares, which have already been allotted to mutual funds in the manner specified in column III of the tableabove.Method of Proportionate Basis of Allotment in the OfferIn the event of the Offer being over-subscribed, our Company and the Selling Shareholder shall finalize thebasis of Allotment in consultation with the BRLMs and the Designated Stock Exchange. The ExecutiveDirector (or any other senior official nominated by them) of the Designated Stock Exchange along with theBRLMs and the Registrar to the Offer shall be responsible for ensuring that the basis of Allotment isfinalized in a fair and proper manner in accordance with the SEBI ICDR Regulations.The Allotment to Bidders shall be made in market lots, on a proportionate basis as explained below:a) Bidders will be categorized according to the number of Equity Shares applied for.b) The total number of Equity Shares to be Allotted to each category as a whole shall be arrived at ona proportionate basis, which is the total number of Equity Shares applied for in that category(number of Bidders in the category multiplied by the number of Equity Shares applied for)multiplied by the inverse of the over-subscription ratio.c) Number of Equity Shares to be Allotted to the successful Bidders will be arrived at on aproportionate basis, which is total number of Equity Shares applied for by each Bidder in thatcategory multiplied by the inverse of the over-subscription ratio.d) In all Bids where the proportionate Allotment is less than one Bid Lot per Bidder, the allotmentshall be made as follows:• Each successful Bidder shall be Allotted a minimum of one Bid Lot; and• The successful Bidders out of the total Bidders for a category shall be determined by draw oflots in a manner such that the total number of Equity Shares Allotted in that category is equalto the number of Equity Shares calculated in accordance with (b) above.217

e) If the proportionate Allotment to a Bidder is a number that is more than [●] but is not a multiple ofone (which is the marketable lot), the decimal would be rounded off to the higher whole number ifthat number is 0.5 or higher. If that number is lower than 0.5, it would be rounded off to the lowerwhole number. All Bidders in such categories would be Allotted Equity Shares arrived at aftersuch rounding off. If the proportionate Allotment to a Bidder is a number that is more than [●] butis not a multiple of one (which is the marketable lot), the adjustment would be carried out betweenthe Non-Institutional and Retail Individual Investor categories.f) If the Equity Shares allocated on a proportionate basis to any category are more than the EquityShares Allotted to the Bidders in that category, the remaining Equity Shares available forAllotment shall be first adjusted against any other category, where the Allotted shares are notsufficient for proportionate Allotment to the successful Bidders in that category. The balanceEquity Shares, if any, remaining after such adjustment will be added to the category comprisingBidders applying for minimum number of Equity Shares. However, no adjustments would be madein the QIB category.Payment of RefundBidders must note that on the basis of name of the Bidders, Depository Participant‘s name, DP ID,Beneficiary Account number provided by them in the Bid-cum-Application Form, the Registrar to the Offerwill obtain, from the Depositories, the Bidders‘ address, bank account details, including the nine digitMagnetic Ink Character Recognition (“MICR”) code as appearing on a cheque leaf. Hence Bidders areadvised to immediately update their bank account details as appearing on the records of the DepositoryParticipant. Please note that failure to do so could result in delays in dispatch of refund order or refundsthrough electronic transfer of funds, as applicable, and any such delay shall be at the Bidders’ sole risk andneither our Company, the Registrar, Escrow Collection Bank(s), nor the BRLMs, nor the SellingShareholder shall be liable to compensate the Bidders for any losses caused to the Bidder due to any suchdelay or shall be liable to pay any interest for such delay.Mode of making refundsThe payment of refund, if any, would be done through various modes in the following order of preference:1. Direct Credit – Applicants having bank accounts with the Refund Banker(s), in this case being,HDFC Bank Limited, Kotak Mahindra Bank Limited and State Bank of India shall be eligible toreceive refunds through direct credit. Charges, if any, levied by the Refund Bank(s) for the samewould be borne by our Company.2. NEFT (National Electronic Fund Transfer) – Payment of refund shall be undertaken through NEFTwherever the applicants’ bank branch is NEFT enabled and has been assigned the Indian FinancialSystem Code (IFSC), which can be linked to a Magnetic Ink Character Recognition (MICR) codeof that particular bank branch. IFSC Code will be obtained from the website of RBI as on a dateprior to the date of payment of refund, duly mapped with MICR code. Wherever the applicantshave registered their nine digit MICR number and their bank account number while opening andoperating the demat account, the same will be duly mapped with the IFSC Code of that particularbank branch and the payment of refund will be made to the applicants through this method. Theprocess flow in respect of refunds by way of NEFT is at an evolving stage and hence use of NEFTis subject to operational feasibility, cost and process efficiency and the past experience of theRegistrars to the Offer. In the event that NEFT is not operationally feasible, the payment of refundswould be made through any one of the other modes as discussed in this section.3. RTGS – Applicants having a bank account at any of the centres specified by the RBI and whoserefund amount exceeds Rs. 1,000,000, have the option to receive refund through RTGS. Sucheligible applicants who indicate their preference to receive refund through RTGS are required toprovide the IFSC code in the Bid cum Application Form. In the event the same is not provided,refund shall be made through ECS. Charges, if any, levied by the Refund Bank(s) for the samewould be borne by our Company. Charges, if any, levied by the applicant‘s bank receiving thecredit would be borne by the Bidder.4. ECS/NECS – Payment of refund would be done through ECS/NECS for applicants having an218

account at any of the centres specified by the RBI. This mode of payment of refunds would besubject to availability of complete bank account details including the MICR code as appearing on acheque leaf, from the Depositories. The payment of refunds is mandatory for applicants having abank account at any of the 68 centers, viz, Ahmedabad, Bangalore, Bhubaneshwar, Kolkata,Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Kanpur, Mumbai, Nagpur, New Delhi, Patna,Thiruvananthapuram (managed by RBI); Baroda, Dehradun, Nashik, Panaji, Surat, Trichy, Trichur,Jodhpur, Gwalior, Jabalpur, Raipur, Calicut, Siliguri (Non- Magnetic Ink Character Recognition(“MICR”)), Pondicherry, Hubli, Shimla (Non-MICR), Tirupur, Burdwan (Non-MICR), Durgapur(Non-MICR), Sholapur, Ranchi, Tirupati (Non-MICR), Dhanbad (Non-MICR), Nellore (Non-MICR) and Kakinada (Non-MICR) (managed by State Bank of India); Agra, Allahabad, Jalandhar,Lucknow, Ludhiana, Varanasi, Kolhapur, Aurangabad, Mysore, Erode, Udaipur, Gorakpur andJammu (managed by Punjab National Bank); Indore (managed by State Bank of Indore); Pune,Salem and Jamshedpur (managed by Union Bank of India); Visakhapatnam (managed by AndhraBank); Mangalore (managed by Corporation Bank); Coimbatore and Rajkot (managed by Bank ofBaroda); Kochi/Ernakulum (managed by State Bank of Travancore); Bhopal (managed by CentralBank of India); Madurai (managed by Canara Bank); Amritsar (managed by Oriental Bank ofCommerce); Haldia (Non-MICR) (managed by United Bank of India); Vijaywada (managed byState Bank of Hyderabad); and Bhilwara (managed by State Bank of Bikaner and Jaipur) asreferred to in SEBI circular no. SEBI/CFD/DILDIP/29/2008/01/02 dated February 1, 2008, exceptwhere the applicant, being eligible, opts to receive refund through Direct Credit, NEFT or RTGS,ECS/NECS). For all other applicants, including those who have not updated their bank particularswith the MICR code, the refund orders will be dispatched under certificate of posting for value upto Rs. 1,500 and through Speed Post/ Registered Post for refund orders of Rs. 1,500 and above.Such refunds will be made by cheques, pay orders or demand drafts drawn on the EscrowCollection Banks and payable at par at places where Bids are received. Bank charges, if any, forcashing such cheques, pay orders or demand drafts at other centers will be payable by the Bidders.Disposal of Applications and application moneys and interest in case of delayOur Company and the Selling Shareholder shall ensure dispatch of Allotment advice, refund orders (exceptfor Bidders who receive refunds through electronic transfer of funds) and give benefit to the beneficiaryaccount with Depository Participants and submit the documents pertaining to the Allotment to the StockExchanges within fifteen days from the date of Offer closure.In case of applicants who receive refunds through ECS/NECS, direct credit or RTGS, the refundinstructions will be given to the clearing system within 15 days from the Bid/Offer Closing Date. A suitablecommunication shall be sent to the Bidders receiving refunds through this mode within 15 days ofBid/Offer Closing Date, giving details of the bank where refunds shall be credited along with amount andexpected date of electronic credit of refund.Our Company shall make best efforts to ensure that all steps for completion of the necessary formalities forlisting and commencement of trading at all the Stock Exchanges where the Equity Shares are proposed tobe listed, are taken within seven Working Days of the finalization of Basis of Allotment of the EquityShares.In accordance with the Companies Act, the requirements of the Stock Exchanges and the SEBI ICDRRegulations, our Company and the Selling Shareholder further undertakes that:• Allotment of Equity Shares shall be made only in dematerialized form within 15 days of the Bid/OfferClosing Date;• Dispatch of refund orders or in a case where the refund or portion thereof is made in electronic manner,the refund instructions are given to the clearing system within 15 days of the Bid/Offer Closing Datewould be ensured; andThe Selling Shareholder shall pay interest at 15% per annum for any delay beyond the 15 day time periodas mentioned above, if Allotment is not made and refund orders are not dispatched instructions to SCSB arenot issued, or if, in a case where the refund or portion thereof is made in electronic manner, the refundinstructions have not been given to the clearing system in the disclosed manner and/or demat credits are notmade to investors within the 15 day time prescribed above as per the SEBI ICDR Regulations.219

Letters of Allotment or Refund OrdersOur Company and the Selling Shareholder shall credit Equity Shares Allotted to the beneficiary accountwith depository participants within 15 days of the Bid/Offer Closing Date, and shall dispatch refund orders,if any, of value up to Rs. 1,500, by ―Under Certificate of Posting and will dispatch refund orders above Rs.1,500, if any, by registered post or speed post at the sole or first Bidder‘s sole risk within 15 days of theBid/Offer Closing Date. Applicants residing at sixty eight centers where clearing houses are managed bythe RBI or banks, will get refunds through ECS/NECS subject to adequate details being available in thedemographic details received from the depositories, except where applicant is otherwise disclosed aseligible to get refunds through direct credit and RTGS. For more information in relation to these sixty eightcenters please refer to Payment of Refund at page 219.The Selling Shareholder will provide adequate funds required for dispatch of refunds orders or Allotmentadvice to the Registrar to the Offer.Refunds will be made through any of the modes described above and bank charges, if any, for encashingcheques, pay orders or demand drafts at other centers will be payable by the Bidders.In accordance with the Companies Act, the requirements of the Stock Exchanges and SEBI ICDRRegulations, our Company and the Selling Shareholder undertake that:(a)(b)Allotment of securities offered to the public shall be made not later than 15 days from theBid/Offer Closing Date.Interest shall be paid by the Selling Shareholder at 15% per annum if the Allotment letters/refundorders have not been dispatched to the applicants or if, in a case where the refund or portionthereof is made in electronic manner, the refund instructions have not been given to the clearingsystem in the disclosed manner within 15 days from the Bid/Offer Closing Date.In case of revision in the Price Band, the Bidding Period will be extended after revision of Price Bandprovided that the Bidding Period shall not exceed 10 Working Days. Any revision in the Price Bandand the revised Bid Period, if applicable, will be widely disseminated by notification to the StockExchanges, by issuing a press release, and also by indicating the change on the web site of the BRLMsand at the terminals of the Syndicate.Utilization of Offer proceedsAs the Offer is an offer for sale of our Equity Shares, our Company will not utilize the Offer proceeds. TheBoard of Directors and the Selling Shareholder declare that all monies received out of the Offer shall betransferred to a separate bank account other than the bank account referred to in sub-section (3) of Section73 of the Companies Act.UNDERTAKINGS BY THE SELLING SHAREHOLDER/ COMPANY(a)(b)(c)Our Company will ensure complaints received in respect of the Offer shall be attended toexpeditiously and satisfactorily;The Selling Shareholder and our Company shall ensure that all the steps for completion of thenecessary formalities for listing and commencement of trading at all stock exchanges where thesecurities are to be listed are taken within 7 working days of finalization of basis of allotment;If such permission is not granted by any of the stock exchanges within 70 days from the closure ofthe Offer, the Selling Shareholder in the Offer, shall forthwith repay without interest all moniesreceived by it from bidders pursuant to the offer documents. In case of delay beyond the eighth dayon which the Selling Shareholder becomes liable to repay the monies received from applicants,interest shall be paid in accordance with the provisions of the Section 73 of the Companies Act;220

(d)(e)(f)(g)(h)(i)The Selling Shareholder shall make available to the Registrar, the funds required for makingrefunds to unsuccessful applicants or dispatch of allotment advice by registered post or speed postas per the modes described in the red herring prospectus and the prospectus.The Selling Shareholder and the Company shall ensure that where the refunds are made throughelectronic transfer of funds, suitable communication shall be sent to the applicant(s) within 15 daysof closure of the Offer, as the case may be, giving details of the bank(s) where refunds shall becredited along with the amount and expected date of electronic refund;Our Company shall ensure that no further issue of securities are made till the securities offeredthrough the Offer document are listed or till the application moneys are refunded on account ofnon-listing, under subscription, etc.;The Selling Shareholder and our Company shall ensure that the certificates of the securities/ refundorders to the non-resident Indians are dispatched within the specified time;The Selling Shareholder and our Company shall ensure that adequate arrangements are made tocollect all Applications Supported by Blocked Amount and to consider them similar to non- ASBAapplications while finalizing the basis of allotment.The Selling Shareholder declares that it shall not have recourse to the Offer proceeds until thedispatch of refund orders following the Allotment of the Equity Shares and demat credit of theEquity Shares to successful Bidders.There shall be no recourse to the proceeds of the Offer for Sale until the final listing and trading approvalshave been obtained from all the Stock Exchanges where listing is proposed.Offer procedure for ASBA BiddersThis section is for the information of investors proposing to subscribe to the Offer through the ASBAprocess. Our Company, the Selling Shareholder and the BRLMs are not liable for any amendments,modifications, or changes in applicable laws or regulations, which may occur after the date of thisRed Herring Prospectus. ASBA Bidders are advised to make their independent investigations and toensure that the ASBA Bid cum Application Form is correctly filled up, as described in this section.The list of banks that have been notified by SEBI to act as SCSB for the ASBA Process are provided onhttp://www.sebi.gov.in. For details on Designated Branches of SCSBs collecting the ASBA Bid cumApplication Form, please refer the above mentioned SEBI link.ASBA ProcessThe ASBA process shall include the following provisions in addition to the provisions specified above fornon ASBA Bidders. The information in this section for Application through ASBA Bid cum ApplicationForm should be read in conjunction to the information provided for Application through Bid cumApplication Form.A Non QIB Investor shall submit his Bid through an ASBA Bid cum Application Form, either in physicalor electronic mode, to the SCSB with whom the bank account of the ASBA Bidder or bank account utilisedby the ASBA Bidder (“ASBA Account”) is maintained. The SCSB shall block an amount equal to the BidAmount in the bank account specified in the ASBA Bid cum Application Form, physical or electronic, onthe basis of an authorisation to this effect given by the account holder at the time of submitting the Bid. TheBid Amount shall remain blocked in the aforesaid ASBA Account until finalisation of the Basis ofAllotment in the Offer and consequent transfer of the Bid Amount against the allocated shares to the PublicOffer Account, or until withdrawal/failure of the Offer or until withdrawal/rejection of the ASBA Bid, asthe case may be. The ASBA data shall thereafter be uploaded by the SCSB in the electronic IPO system ofthe Stock Exchanges. Once the Basis of Allotment is finalized, the Registrar to the Offer shall send anappropriate request to the Controlling Branch of the SCSB for unblocking the relevant bank accounts andfor transferring the amount allocable to the successful ASBA Bidders to the Public Offer Account. In caseof withdrawal/failure of the Offer, the blocked amount shall be unblocked on receipt of such informationfrom the BRLMs.221

ASBA Bid cum Application FormASBA Bidders shall use the ASBA Bid cum Application Form bearing the stamp of the members of theSyndicate and/or the Designated Branch of SCSB, as the case may be, for the purpose of making Bids interms of the Red Herring Prospectus. ASBA Bidders are required to submit their Bids, either in physical orelectronic mode. In case of Application in physical mode, the ASBA Bidder shall submit the ASBA Bidcum Application form at the Designated Branch of the SCSB. In case of Application in electronic form, theASBA Bidder shall submit the ASBA Bid cum Application Form either through the internet bankingfacility available with the SCSB, or such other electronically enabled mechanism for bidding and blockingfunds in the ASBA account held with SCSB, and accordingly registering such Bids. The ASBA Bidders cansubmit up to 3 Bid options in the ASBA Bid cum Application Form.Upon the allocation of Equity Shares, dispatch of the CAN, and filing of the Prospectus with the RoC, theASBA Bid cum Application Form shall be considered as the Application Form. Upon completing andsubmitting the ASBA Bid cum Application Form to the Designated Branch of the SCSB, the ASBA Bidderis deemed to have authorized our Company to make the necessary changes in the Red Herring Prospectus aswould be required for filing the Prospectus with the RoC and as would be required by RoC after such filing,without prior or subsequent notice of such changes to the ASBA Bidder.The prescribed colour of the ASBA Bid cum Application Form shall be green.Who can Bid?In accordance with the SEBI Circular no. SEBI/CFD/DIL/ASBA/1/2009/30/12 dated December 30, 2009),only Non QIB Investor can submit their Application through ASBA process to bid for the Equity Shares ofour Company.Maximum and Minimum Bid Size for ASBA BiddersThe Maximum and Minimum Bid Size for Bidders Applying using Bid cum Application Form or ASBABid cum Application Form is same for each category of investors as described above in “Offer Structure”on page 185.Information for the ASBA Bidders:(a)(b)(c)(d)(e)The BRLMs shall ensure that adequate arrangements are made to circulate copies of the RedHerring Prospectus and ASBA Bid cum Application Form to the SCSBs to enable them to makeavailable such copies to investors applying under the ASBA process. Additionally, the BRLMsshall ensure that the SCSBs are provided with soft copies of the abridged prospectus and theASBA Bid cum Application Form and that the same are made available on the websites of theSCSBs.ASBA Bidders who would like to obtain the Red Herring Prospectus and/or the ASBA Bid cumApplication Form can obtain the same from the Designated Branches of the SCSBs or the BRLMs.ASBA Bidders can also obtain a copy of the abridged prospectus and/or the ASBA Bid cumApplication Form in electronic form on the websites of the SCSBs.The Bids should be submitted on the prescribed ASBA Bid cum Application Form if applied inphysical mode. SCSBs may provide the electronic mode of Bidding either through an internetenabled bidding and banking facility or such other secured, electronically enabled mechanism forbidding and blocking funds in the accounts of the respective eligible investors.ASBA Bid cum Application Forms should bear the stamp of the Syndicate Members and/orDesignated Branch of the SCSB. ASBA Bid cum Application Forms which do not bear the stampwill be rejected.ASBA Bidders shall correctly mention the bank account number in the ASBA Bid cumApplication Form and ensure that funds equal to the Bid Amount are available in the bank accountmaintained with the SCSB before submitting the ASBA Bid cum Application Form to the222

espective Designated Branch.(f)(g)If the ASBA Account holder is different from the ASBA Bidder, the ASBA Bid cum ApplicationForm should be signed by the account holder as provided in the ASBA Bid cum Application Form.ASBA Bidders shall correctly mention their DP ID and Client ID in the ASBA Bid cumApplication Form. For the purpose of evaluating the validity of Bids, the demographic details ofASBA Bidders shall be derived from the DP ID and Client ID mentioned in the ASBA Bid cumApplication Form.Method and Process of Bidding(a)(b)(c)(d)(e)(f)(g)ASBA Bidders are required to submit their Bids, either in physical or electronic mode. ASBABidders submitting their Bids in physical mode should approach the Designated Branches of theSCSBs. ASBA Bidders submitting their Bids in electronic form shall submit their Bids either usingthe internet enabled bidding and banking facility of the SCSBs or such other electronically enabledmechanism for bidding and blocking funds in the accounts of the respective eligible investors, andaccordingly registering such Bids. Every Designated Branch of the SCSB shall accept Bids fromall such investors who hold accounts with them and desire to place Bids through them. SuchSCSBs shall have the right to vet the Bids, subject to the terms of the SEBI ICDR Regulations andRed Herring Prospectus.The Designated Branches of the SCSBs shall give an acknowledgment specifying the ASBA Bidcum Application Form number to the ASBA Bidders as a proof of acceptance of the ASBA Bidcum Application Form. Such acknowledgment does not in any manner guarantee that the EquityShares bid for shall be Allocated to the ASBA Bidders.Each ASBA Bid cum Application Form will give the ASBA Bidder options to bid for the EquityShares at the price within the Price Band and specify the demand (i.e. the number of Equity SharesBid for) for three such options. After determination of the Offer Price, the number of EquityShares bid for by Bidders (other than QIB Bidders) at or above the Offer Price or at the Cut-offPrice will be considered for allocation along with the Non-ASBA Bidders of respective category,who have bid for Equity Shares at or above the Offer Price or at Cut-off Price.Upon receipt of the ASBA Bid cum Application Form, submitted whether in physical or electronicmode, the Designated Branch of the SCSB shall verify if sufficient funds equal to the MaximumBid Amount, are available in the ASBA Account, as mentioned in the ASBA Bid cum ApplicationForm, prior to uploading such Bids with the Stock Exchanges.If sufficient funds are not available in the ASBA Account, the Designated Branch of the SCSBshall reject such Bids and shall not upload such Bids with the Stock Exchanges.If sufficient funds are available in the ASBA Account, the SCSB shall block an amount equivalentto the maximum Bid Amount mentioned in the ASBA Bid cum Application Form. The DesignatedBranch shall thereafter enter the Bid details from the prescribed ASBA Bid cum Application Form,if submitted in physical mode, or the Bid information submitted through the electronic mode madeavailable by the SCSBs, as the case may be, into the electronic bidding system of the StockExchanges and generate a Transaction Registration Slip (“TRS”). The SCSBs will enter each Bidoption into the electronic bidding system as a separate Bid and generate a Transaction RegistrationSlip, for each price and demand option. Therefore, a Bidder can receive up to three TRSs for eachBid cum Application Form. The TRS shall be furnished to the ASBA Bidder only on request.An ASBA Bidder cannot bid, either in physical or electronic mode, on another ASBA Bid cumApplication Form or a non-ASBA Bid cum Application Form after bidding on one ASBA Bid cumApplication Form, either in physical or electronic mode, has been submitted to the DesignatedBranches of SCSBs or uploaded by the ASBA Bidder, as the case may be. Submission of a secondASBA Bid cum Application Form or a Non-ASBA Bid cum Application Form to either the sameor to another Designated Branch of the SCSB will be treated as multiple Bids and will be liable tobe rejected either before entering the Bid into the electronic bidding system, or at any point of timeprior to the allocation or Allotment of Equity Shares in the Offer.223

Mode of PaymentUpon submission of an ASBA Bid cum Application Form with the SCSB, whether in physical or electronicmode, each ASBA Bidder shall be deemed to have agreed to block the entire Bid Amount and authorizedthe Designated Branch of the SCSB to block the Bid Amount, in the bank account maintained with theSCSB.Bid Amounts paid in cash, by money order or by postal order or ASBA Bid cum Application Formaccompanied by cash, draft, money order, postal order or any mode of payment other than blocked amountsin the SCSB bank accounts, shall not be accepted.After verifying that sufficient funds are available in the ASBA Account, the SCSB shall block an amountequivalent to the maximum Bid Amount mentioned in the ASBA Bid cum Application Form till theDesignated Date. On the Designated Date, the SCSBs shall transfer the amounts allocable to the ASBABidders from the respective ASBA Account into the Public Offer Account. The balance amount, if anyagainst the said Bid in the ASBA Accounts shall then be unblocked by the SCSBs on the basis of theinstructions issued in this regard by the Registrar to the Offer.The entire Bid Amount, as per the Bid cum Application Form submitted by the respective ASBA Bidders,would be required to be blocked in the respective ASBA Accounts from the time of the submission of theASBA Bid cum Application Form, whether in physical or electronic mode, until finalisation of the Basis ofAllotment in the Offer and consequent transfer of the Bid Amount against allocated shares to the PublicOffer Account, or until withdrawal/failure of the Offer or until rejection of the ASBA Bid, as the case maybe.Electronic registration of Bids by SCSBs(a)In case of ASBA Bid cum Application Forms, whether in physical or electronic mode, theDesignated Branch of the SCSBs will register the Bids using the online facilities of the StockExchanges. SCSB shall not upload any ASBA Application Form in the electronic bidding systemof the Stock Exchange(s) unless(i)(ii)it has received the ASBA in a physical or electronic form; andit has blocked the application money in the bank account specified in the ASBA or hassystems to ensure that Electronic ASBAs are accepted in the system only after blocking ofapplication money in the relevant bank account opened with it.(b)(c)(d)The Stock Exchanges offer a screen-based facility for registering Bids for the Offer which will beavailable on the terminals of Designated Branches during the Bidding Period. The DesignatedBranches can also set up facilities for offline electronic registration of Bids subject to the conditionthat they will subsequently upload the offline data file into the online facilities for book buildingon a regular basis. On the Bid/Offer Closing Date, the Designated Branches of the SCSBs shallupload the Bids till such time as may be permitted by the Stock Exchanges. ASBA Bidders arecautioned that high inflow of bids typically received on the last day of the bidding may lead tosome Bids received on the last day not being uploaded due to lack of sufficient uploading time,and such bids that are not uploaded may not be considered for allocation.The aggregate demand and price for Bids registered on the electronic facilities of the StockExchanges will be displayed online on the websites of the Stock Exchanges.At the time of registering each Bid, the Designated Branches of the SCSBs shall enter theinformation pertaining to the investor into the online system, including the following details:• Name of the Bidder(s);• Application Number;• Permanent Account Number;• Depository Participant identification no.; and224

• Client identification No. of the Bidder‘s beneficiary account.• Details of multiple bids- Number of equity shares for each bid- Bid rate for each bidIn case of electronic ASBA, the ASBA Bidder shall himself fill in all the above mentioned details, exceptthe Bid cum Application Form number which shall be system generated. The SCSBs shall thereafter uploadall the abovementioned details in the electronic bidding system provided by the Stock Exchange(s).(e)(f)(g)(h)(i)(j)A system generated TRS will be given to the ASBA Bidder upon request as proof of theregistration of the Bid. It is the ASBA Bidders responsibility to obtain the TRS from theDesignated Branches of the SCSBs. The registration of the Bid by the Designated Branch of theSCSB does not guarantee that the Equity Shares bid for shall be Allocated to the ASBA Bidders.Such TRS will be non-negotiable and by itself will not create any obligation of any kind.It is to be distinctly understood that the permission given by the Stock Exchanges to use theirnetwork and software of the online IPO system should not in any way be deemed or construed tomean that the compliance with various statutory and other requirements by our Company, theSelling Shareholder or the BRLMs or the Designated Branches of the SCSBs are cleared orapproved by the Stock Exchanges; nor does it in any manner warrant, certify or endorse thecorrectness or completeness of compliance with the statutory and other requirements; nor does ittake any responsibility for the financial or other soundness of our Company, our management orany scheme or project of our Company.It is also to be distinctly understood that the approval given by the Stock Exchanges should not inany way be deemed or construed that this Red Herring Prospectus has been cleared or approved bythe Stock Exchanges; nor does it in any manner warrant, certify or endorse the correctness orcompleteness of any of the contents of this Red Herring Prospectus; nor does it warrant that ourEquity Shares will be listed or will continue to be listed on the Stock Exchanges.The SCSB may reject the ASBA Bid upon receipt of ASBA Bid cum Application Form, if thebank account maintained with the SCSB as mentioned in the ASBA Bid cum Application Formdoes not have sufficient funds equivalent to the Bid Amount. Subsequent to the acceptance of theBid by the Designated Branch, our Company and the Selling Shareholder would have a right toreject the Bids only on technical grounds.Only Bids that are uploaded on the online IPO system of the Stock Exchanges shall be consideredfor allocation/Allotment. In case of discrepancy of data between the BSE or NSE and theDesignated Branches of the SCSBs, the decision of the Registrar to the Offer, in consultation withthe BRLMs, our Company/ the Selling Shareholder and the Designated Stock Exchange, based onthe physical records of the ASBA Bid cum Application Forms shall be final and binding on allconcerned.Build up of the book and revision of Bids(a)(b)(c)(d)Bids registered through the Designated Branches of the SCSBs shall be electronically transmittedto the BSE or the NSE mainframe on a regular basis.The book gets built up at various price levels. This information will be available with the BRLMs,the Stock Exchanges and the Designated Branches of the SCSBs on a regular basis.During the Bidding Period, any Bidder who has bid using ASBA Bid cum Application Form at aparticular price level is free to revise his or her Bid within the Price Band using the printedRevision Form, which is a part of the Bid cum Application Form in case the Application is madeusing physical form and through the online system in case the Application is made through theonline system of SCSB.Revisions can be made in both the desired number of Equity Shares and the Bid price by using the225

Revision Form. Apart from mentioning the revised options in the revision form, the Bidder mustalso mention the details of all the options in his or her ASBA Bid cum Application Form or earlierASBA Revision Form. For example, if a Bidder has provided three Bids in the ASBA Bid cumApplication Form and he is changing only one of the options in the ASBA Revision Form, he muststill fill the details of the other two options that are not being revised, in the ASBA Revision Form.The SCSBs will not accept incomplete or inaccurate ASBA Revision Forms.(e)(f)(g)(h)(i)The Bidder can make this revision any number of times during the Bidding Period. However, forany revision(s) in the Bid, the Bidders will have to use the services of the same SCSB throughwhom he or she had placed the original Bid. Bidders are advised to retain copies of the blankASBA Revision Form and the revised Bid must be made only in such ASBA Revision Form orcopies thereof.Any revision of the Bid shall be accompanied by the concerned SCSB blocking additional amountto reflect the Maximum Bid Amount on account of the upward revision of the Bid. The excessamount, if any, resulting from downward revision of the Bid would be unblocked immediately inaccordance with the terms of this Red Herring Prospectus.When a Bidder revises his or her Bid, he or she shall surrender the earlier TRS, if provided, andget a revised TRS from the SCSB. It is the responsibility of the Bidder to request for andobtain the revised TRS, which will act as proof of his or her having revised the previous Bid.The SCSBs shall provide aggregate information about the numbers of ASBA Bid cum ApplicationForms uploaded, total number of Equity Shares and total amount blocked against the uploadedASBA Bid cum Application Form and other information pertaining to the ASBA Bidders. TheRegistrar to the Offer shall reconcile the electronic data received from the Stock Exchanges andthe information received from the SCSBs. In the event of any error or discrepancy, the Registrar tothe Offer shall inform the SCSB of the same. The SCSB shall be responsible to provide therectified data within the time stipulated by the Registrar to the Offer. Further the decision of theRegistrar to the Offer in consultation with the BRLMs, the Selling Shareholder, our Company andthe Designated Stock Exchange, in this regard shall be final and binding.Only Bids that are uploaded on the online IPO system of the BSE and the NSE shall be consideredfor allocation/ Allotment.Issuance of CAN(a)(b)Upon approval of the Basis of Allotment by the Designated Stock Exchange, the Registrar to theOffer shall send to the Controlling Branches of the SCSBs, a list of the ASBA Bidders who havebeen allocated Equity Shares in the Offer. Investors should note that our Company shall endeavorto ensure that the demat credit of Equity Shares pursuant to Allotment shall be made on the samedate to all investors in the Offer; andThe ASBA Bidders shall directly receive the CAN from the Registrar to the Offer. The dispatch ofa CAN shall be deemed a valid, binding and irrevocable contract for the ASBA Bidder.Unblocking of ASBA AccountOn the basis of instructions from the Registrar to the Offer, the SCSBs shall transfer the requisite amountagainst each successful ASBA Bidder to the Public Offer Account and shall unblock excess amount, if anyin the ASBA Account. However, the Bid Amount may be unblocked in the ASBA Account prior to receiptof intimation from the Registrar to the Offer by the Controlling Branch of the SCSB regarding finalisationof the Basis of Allotment in the Offer, in the event of withdrawal/failure of the Offer or rejection of theASBA Bid, as the case may be.Allotment of Equity SharesOur Company will ensure that the Allotment of Equity Shares is done within 15 days of the Bid/OfferClosing Date. After the funds are transferred from the bank account of the ASBA Bidders to the PublicOffer Account on the Designated Date, to the extent applicable, our Company and the Selling Shareholder226

would ensure the credit of the Allotted Equity Shares to the depository accounts of all successful ASBABidders' within the aforesaid due date.GENERAL INSTRUCTIONSDo’s:(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l).(m)(n)(o)Check if you are a Non QIB Investor and eligible to Bid under ASBA process.Ensure that you use the ASBA Bid cum Application Form specified for the purposes of ASBAprocess.Read all the instructions carefully and complete the ASBA Bid cum Application Form (if the Bidis submitted in physical mode, the prescribed ASBA Bid cum Application Form is green in color.Please ensure that you have marked the appropriate check box in the ASBA Bid cum ApplicationForm for the applicable categoryEnsure that the details of your Depository Participant and beneficiary account are correct and thatyour beneficiary account is activated, as Equity Shares will be Allotted in dematerialised formonly.Ensure that your Bid is submitted at a Designated Branch of an SCSB, with a branch of which theASBA Bidder or a person whose bank account will be utilized by the ASBA Bidder for biddinghas a bank account and not to the Bankers to the Offer/Collecting Banks (assuming that suchCollecting Bank is not a SCSB), to our Company or Registrar or Lead Manager to the Offer.Ensure that the ASBA Bid cum Application Form is signed by the account holder in case theapplicant is not the account holder.Ensure that you have mentioned the correct bank account No. in the ASBA Bid cum ApplicationForm.Ensure that you have funds equal to the option with the maximum Bid amount as mentioned in theASBA form available in your bank account maintained with the SCSB before submitting theASBA Bid cum Application Form to the respective Designated Branch of the SCSB.Ensure that you have correctly checked the authorisation box in the ASBA Bid cum ApplicationForm, or have otherwise provided an authorisation to the SCSB via the electronic mode, for theDesignated Branch to block funds equivalent to the Bid Amount mentioned in the ASBA Bid cumApplication Form in your ASBA Account maintained with a branch of the concerned SCSB.Ensure that you receive a TRS for each of your Bids from the Designated Branch of the concernedSCSB for the submission of your ASBA Bid cum Application Form.Ensure that you have mentioned your Permanent Account Number (“PAN”) allotted under the I.T.Act unless you are a resident of the State of Sikkim.Ensure that the name(s) and PAN(s) given in the ASBA Bid cum Application Form is exactly thesame as the name(s) and PAN(s) in which the beneficiary account is held with the DepositoryParticipant. In case the ASBA Bid is submitted in joint names, ensure that the beneficiary accountis also held in same joint names and such names are in the same sequence in which they appear inthe ASBA Bid cum Application Form.Ensure that the Demographic Details are updated, true and correct, in all respects.Ensure that, in case of revision of Price Band, the bids are revised to keep the Bid Amount is uptoRs.100,000 in case of Retail Individual Investors and more than Rs 100,000 in case of NonInstitutional Investors for allotment in the same category as per the original bid form.227

Don'ts:(a)(b)(c)(d)(e)(f)(g)(h)Do not submit an ASBA Bid if you are a QIB Bidder.Do not instruct your respective banks to release the funds blocked in the ASBA Account under theASBA process.Do not Bid for lower than the minimum Bid size.Do not Bid on another ASBA or Non-ASBA Bid cum Application Form after you have submitteda Bid to a Designated Branch of the SCSB.Payment of Bid Amounts in any mode other than blocked amounts in the bank accountsmaintained by SCSBs, shall not be accepted under the ASBA process.Do not send your physical ASBA Bid cum Application Form by post; instead submit the same to aDesignated Branch of the SCSB only.in case of Retail Individual Investors and Eligible Employees, do not fill up the ASBA Bid cumApplication Form such that the bid amount against the number of Equity Shares Bid for exceedsRs. 100,000.Do not submit the GIR number instead of the PAN.Bids by ASBA Bidders must be:(a)(b)(c)(d)(e)Made only in the prescribed ASBA Bid cum Application Form, which is green in colour, ifsubmitted in physical mode, or electronic mode.In single name or in joint names (not more than three, and in the same order as their DepositoryParticipant details).Completed in full, in BLOCK LETTERS in ENGLISH and in accordance with the instructionscontained herein, in the ASBA Bid cum Application Form.The Bids must be for a minimum of [●] Equity Shares and in multiples thereof subject to amaximum of [●] Equity Shares such that the Bid Amount does not exceed Rs. 100,000 for RetailIndividual Investors.Thumb impressions and signatures other than in the languages specified in the Eighth Schedule inthe Constitution of India must be attested by a Magistrate or a Notary Public or a SpecialExecutive Magistrate under official seal.ASBA Bidder’s depository account and bank detailsALL ASBA BIDDERS SHALL RECEIVE THE EQUITY SHARES ALLOTTED TO THEM INDEMATERIALISED FORM. ALL ASBA BIDDERS SHOULD MENTION THEIR DEPOSITORYPARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER,BENEFICIARY ACCOUNT NUMBER AND PERMANENT ACCOUNT NUMBER IN THE ASBABID CUM APPLICATION FORM. ASBA BIDDERS MUST ENSURE THAT THE NAME GIVENIN THE ASBA BID CUM APPLICATION FORM IS EXACTLY THE SAME AS THE NAME INWHICH THE DEPOSITORY ACCOUNT IS HELD. ADDITIONALLY, THE PERMANENTACCOUNT NUMBER IN THE ASBA BID CUM APPLICATION FORM SHOULD BE EXACTLYTHE SAME AS PROVIDED WITH THE DEPOSITORY ACCOUNT. IN CASE THE ASBA BIDCUM APPLICATION FORM IS SUBMITTED IN JOINT NAMES, IT SHOULD BE ENSUREDTHAT THE DEPOSITORY ACCOUNT IS ALSO HELD IN THE SAME JOINT NAMES ANDARE IN THE SAME SEQUENCE IN WHICH THEY APPEAR IN THE ASBA BID CUMAPPLICATION FORM.ASBA Bidders should note that on the basis of name of the ASBA Bidders, PAN, Depository228

Participant’s name and identification number and beneficiary account number provided by them inthe ASBA Bid cum Application Form, the Registrar to the Offer will obtain from the Depository, theDemographic Details of the ASBA Bidders. Hence, ASBA Bidders should carefully fill in theirDepository Account details in the ASBA Bid cum Application Form.As these Demographic Details would be used for all correspondence with the ASBA Bidders they areadvised to update their Demographic Details as provided to their Depository Participants.By signing the ASBA Bid cum Application Form, the ASBA Bidder is deemed to have authorised theDepositories to provide, upon request, to the Registrar to the Offer, the required Demographic Details asavailable on its records.CAN and letters intimating unblocking of bank account of the respective ASBA Bidder would be mailed atthe address of the ASBA Bidder as per the Demographic Details received from the Depositories. ASBABidders may note that delivery of CAN or letters intimating unblocking of bank account may be delayed ifthe same once sent to the address obtained from the Depositories are returned undelivered. Note that anysuch delay shall be at the sole risk of the ASBA Bidders and neither of the Designated Branches of theSCSBs, the members of the Syndicate, or our Company/ the Selling Shareholder shall be liable tocompensate the ASBA Bidder for any losses caused to the ASBA Bidder due to any such delay or be liableto pay any interest for such delay.In case no corresponding record is available with the Depositories that match three parameters, namely,names of the ASBA Bidders (including the order of names of joint holders), the DP ID and the beneficiaryaccount number, then such Bids are liable to be rejected.ASBA Bidders are required to ensure that the beneficiary account is activated, as Equity Shares will beAllotted in dematerialised form only.Payment mechanism under ASBAThe ASBA Bidders shall specify the bank account number in the ASBA Bid cum Application Form and theSCSB shall block an amount equivalent to the Bid Amount in the bank account specified in the Bid cumApplication Form. The SCSB shall keep the Bid Amount in the relevant bank account blocked untilwithdrawal/rejection of the ASBA Bid or receipt of instructions from the Registrar to the Offer to unblockthe Bid Amount.In the event of withdrawal or rejection of ASBA Bid cum Application Form or for unsuccessful Bid cumApplication Forms, the Registrar to the Offer shall give instructions to the Controlling Branch of the SCSBto unblock the application money in the relevant bank account. The Bid Amount shall remain blocked in theASBA Account until finalisation of the Basis of Allotment in the Offer and consequent transfer of the BidAmount to the Public Offer Account, or until withdrawal/failure of the Offer or until rejection of the ASBABid, as the case may be.Any revision of the Bid shall be accompanied by the concerned SCSB blocking additional amount to reflectthe Maximum Bid Amount on account of the upward revision of the Bid. The excess amount, if any,resulting from downward revision of the Bid would be unblocked immediately in accordance with the termsof this RHP.ASBA Bids under Power of AttorneyIn case of ASBA Bids made pursuant to a power of attorney, a certified copy of the power of attorney mustbe lodged along with the ASBA Bid cum Application Form. Failing this, our Company and the SellingShareholder, in consultation with the BRLMs, reserves the right to reject such ASBA Bids.Our Company and the Selling Shareholder, in their absolute discretion, reserve the right to relax the abovecondition of simultaneous lodging of the power of attorney along with the ASBA Bid cum ApplicationForm, subject to such terms and conditions that we, in consultation with the BRLMs may deem fit.OTHER INSTRUCTIONSWithdrawal of ASBA BidsIn case an ASBA Bidder wants to withdraw the ASBA Bid cum Application Form during the Bidding229

Period, the ASBA Bidder shall submit the withdrawal request to the SCSB, which shall do the necessary,including deletion of details of the withdrawn ASBA from the electronic bidding system of the StockExchange(s) and unblocking of funds in the relevant bank account.In case an ASBA Bidder wants to withdraw the ASBA cum Application Form after the Bid/Offer ClosingDate, the ASBA Bidder shall submit the withdrawal request to the Registrar to the Offer. The Registrar tothe Offer shall delete the withdrawn Bid from the Bid file. The instruction for and unblocking of funds inthe relevant bank account, in such withdrawals, shall be forwarded by the Registrar to the Offer to theSCSB on finalization of the Basis of Allotment.Joint ASBA BidsASBA Bids may be made in single or joint names (not more than three). In case of joint ASBA Bids, allcommunication will be addressed to the First Bidder and will be dispatched to his address.Right to Reject ASBA BidsThe Designated Branches of the SCSBs shall have the right to reject ASBA Bids if at the time of blockingthe Bid Amount in the Bidder‘s bank account, the respective Designated Branch ascertains that sufficientfunds are not available in the Bidder‘s bank account maintained with the SCSB. Subsequent to theacceptance of the ASBA Bid by the SCSB, our Company and the Selling Shareholder would have a right toreject the ASBA Bids only on technical grounds.Further, in case any DP ID, Client ID or PAN mentioned in the ASBA Bid cum Application Form does notmatch with one available in the depository‘s database, such ASBA Bid will be liable to be rejected by theRegistrar to the Offer.GROUNDS FOR TECHNICAL REJECTIONS UNDER THE ASBA PROCESSIn addition to the grounds listed under “Grounds for Technical Rejection” on page 211, applications underthe ASBA process are liable to be rejected on, inter alia, the following technical grounds:1. Amount mentioned in the ASBA Bid cum Application Form does not tally with the amountpayable for the value of Equity Shares Bid for in each bid;2. Age of First Bidder not given;3. Bid made by Qualified Institutional Bidders4. Bids by persons not competent to contract under the Indian Contract Act, 1872, including minorsand persons of unsound mind;5. PAN not stated, or GIR number furnished instead of PAN (for details see “Offer Procedure -Permanent Account Number or PAN” on page 211) unless the ASBA Bidder is a resident of theState of Sikkim.;6. Bids for number of Equity Shares, which are not in multiples of one Bid Lot;7. Authorisation for blocking funds in the ASBA Bidder‘s bank account not ticked or provided;8. Multiple Bids as defined in this Red Herring Prospectus;9. In case of Bid under power of attorney, relevant documents are not submitted;10. ASBA Bids accompanied by money order/postal order/cash;11. Signature of sole and/or joint Bidders missing in case of ASBA Bid cum Application Formssubmitted in physical mode;12. ASBA Bid cum Application Form does not have the stamp of the SCSB and/or a member of the230

Syndicate;13. ASBA Bid cum Application Form does not have the Bidder‘s depository account details;14. ASBA Bid cum Application Form is not delivered, either in physical or electronic form, by theBidder within the time prescribed and as per the instructions provided in the ASBA Bid cumApplication Form and the RHP;15. Inadequate funds in the ASBA Account to block the Bid Amount specified in the ASBA Bid cumApplication Form at the time of blocking such Bid Amount in the ASBA Account;16. In case no corresponding record is available with the Depositories that matches three parametersnamely, names of the Bidders (including the order of names of joint holders), the DP ID and thebeneficiary account number; and17. Bidders are advised that ASBA Bids not uploaded in the electronic book of the Stock Exchanges,due to any of the grounds mentioned above, would be rejected.COMMUNICATIONSAll future communication in connection with ASBA Bids made in the Offer should be addressed to theRegistrar to the Offer quoting the full name of the sole or First ASBA Bidder, ASBA Bid cum ApplicationForm number, details of Depository Participant, number of Equity Shares applied for, date of ASBA Bidcum Application Form, name and address of the Designated Branch of the SCSB where the ASBA Bid wassubmitted, bank account number in which the amount equivalent to the Bid amount was blocked and a copyof the acknowledgement slip. The Registrar to the Offer shall obtain the required information from theSCSBs for addressing any clarifications or grievances. The SCSB shall be responsible for any damage orliability resulting from any errors, fraud or willful negligence on the part of any employee of the concernedSCSB, including its Designated Branches and the branches where the ASBA Accounts are held. OurCompany, the Selling Shareholder, the BRLMs, the Syndicate Members and the Registrar to the Offeraccept no responsibility for errors, omissions, commissions or any acts of SCSBs including any defaults incomplying with its obligations under applicable SEBI ICDR Regulations.ASBA Investors can contact the Compliance Officer, the Designated Branch of the SCSB where the ASBABid cum Application Form was submitted, or the Registrar to the Offer in case of any pre- or post-Offerrelated problems such as non-receipt of credit of Allotted Equity Shares in the respective beneficiaryaccounts, unblocking of excess Bid Amount, etc.Basis of AllocationBids received from ASBA Bidders will be considered at par with Bids received from non-ASBA Bidders.The basis of allocation to such valid ASBA and non-ASBA Bidders will be that applicable to respectivecategory. For details, see “Offer Procedure- Basis of Allotment” on page 214.Method of Proportionate basis of allocation in the OfferNo preference shall be given vis-à-vis ASBA and non-ASBA Bidders. The allocation shall be on aproportionate basis as discussed on page 219 of this Red Herring Prospectus.Undertakings by our Company and the Selling Shareholder in relation to ASBAIn addition to the undertakings by our Promoter as the Selling Shareholder described under the section titled“Offer Procedure - Undertakings by the Selling Shareholder/ Company” on page 191, with respect to theASBA Bidders, our Company and the Selling Shareholder undertake that adequate arrangements shall bemade to collect all ASBA Forms and ASBA Bidders shall be considered similar to other Bidders whilefinalizing the ‘Basis of Allocation’.231

RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIESForeign investment in Indian securities is governed by the provisions of the FEMA read with the applicableFEMA Regulations and the FDI Policy issued in November 2006 by the DIPP. Foreign investment ispermitted (except in the prohibited sectors) in Indian companies either through the automatic route or theapproval route, depending upon the sector in which foreign investment is sought to be made.Under the automatic route, no prior approval of the GoI is required for the issue of securities by Indiancompanies/acquisition of securities of Indian companies, subject to the sectoral caps and other prescribedconditions. Investors are required to file the required documentation with the RBI within 30 days of suchissue/acquisition of securities. Under the approval route, prior approval from the FIPB/RBI is required. FDIfor the items or activities that cannot be brought in under the automatic route may be brought in through theapproval route. Approvals are accorded on the recommendation of the FIPB, which is chaired by theSecretary, DIPP, with the Union Finance Secretary, Commerce Secretary and other key Secretaries of theGoI as its members.Regulation 10A (b) of the FEMA Regulations provides that the transfer by way of sale of shares ordebentures of an Indian company engaged in the activities listed within item nos. 1, 2 and 3 provided underAnnexure B to Schedule I of the FEMA Regulations, from a person resident in India to a person residentoutside India, shall require prior permission of the RBI. However, vide a RBI circular A.P (DIR Series)Circular No. 16 dated October 4, 2004 and A.P. (DIR Series) Circular No. 63 dated April 22, 2009 grantedgeneral permission for the transfer of shares and convertible debentures of an Indian company by nonresidentsto residents and from residents to non-residents, subject to the terms and conditions, includingpricing restrictions and filing and other requirements, specified in such circulars.Investment by FIIsFIIs including institutions such as pension funds, mutual funds, investment trusts, insurance and reinsurancecompanies, international or multilateral organizations or their agencies, foreign governmental agencies,sovereign wealth funds, foreign central banks, asset management companies, investment managers oradvisors, banks, trustees, endowment funds, university funds, foundation or charitable trusts or societies andinstitutional portfolio managers can invest in all the securities traded on the primary and secondary marketsin India. FIIs are required to obtain an initial registration from SEBI and a general permission from the RBIto engage in transactions regulated under the FEMA. FIIs must also comply with the provisions of the FIIRegulations. The initial registration and the RBI’s general permission together enable the registered FII tobuy (subject to the ownership restrictions discussed below) and sell freely, securities issued by Indiancompanies, to realize capital gains or investments made through the initial amount invested in India, tosubscribe or renounce rights issues for shares, to appoint a domestic custodian for custody of investmentsheld and to repatriate the capital, capital gains, dividends, income received by way of interest and anycompensation received towards sale or renunciation of rights issues of shares.FIIs are permitted to purchase shares of an Indian company through public/private placement under:(i).(ii).Regulation 5 (1) of the FEMA Regulations, subject to terms and conditions specified underSchedule 1 of the FEMA Regulations (“FDI Route”).Regulation 5 (2) of the FEMA Regulations subject to terms and conditions specified underSchedule 2 of the FEMA Regulations (“PIS Route”).In case of investments under FDI Route, investments are made either directly to the company account, orthrough a foreign currency denominated account maintained by the FII with an authorised dealer, whereinForm FC-GPR is required to be filed by the company. Form FC-GPR is a filing requirement essentially forinvestments made by non-residents under the ‘automatic route’ or ‘approval route’ falling under Schedule 1of the FEMA Regulations.In case of investments under the PIS Route, investments are made through special non-resident rupeeaccount, wherein Form LEC (FII) is required to be filed by the designated bank of the FII concerned. FormLEC (FII) is essentially a filing requirement for FII investment (both in the primary as well as the secondary232

market) made through the PIS Route. Foreign investment under the FDI Route is restricted/ prohibited insectors provided in part A and part B of Annexure A to Schedule 1 of the FEMA Regulations.Ownership Restrictions of FIIsThe issue of securities to a single FII under the PIS Route should not exceed 10% of the issued and paid upcapital of the company. In respect of an FII investing in securities on behalf of its sub-accounts, theinvestment on behalf of each sub-account shall not exceed 10% of the total issued and paid-up capital.The aggregate FII holding in a company cannot exceed 24% of its total paid-up capital. The said 24% limitcan be increased up to 100% by passing a resolution by the board of directors followed by passing a specialresolution to that effect by the shareholders of the company.Subject to compliance with all applicable Indian laws, rules, regulations guidelines and approvals in termsof Regulation 15A(1) of the FII Regulations, an FII may issue, deal or hold, offshore derivative instrumentssuch as “Participatory Notes”, equity-linked notes or any other similar instruments against underlyingsecurities listed or proposed to be listed on any stock exchange in India only in favour of those entitieswhich are regulated by any relevant regulatory authorities in the countries of their incorporation orestablishment subject to compliance of “know your client” requirements. An FII or their Sub-Account shallalso ensure that no further downstream issue or transfer of any instrument referred to hereinabove is madeto any person other than a regulated entity. FIIs and their Sub-Accounts are not allowed to issue offshorederivative instruments with underlying as derivatives.Calculation of total foreign investment in Indian companiesForeign investment in Indian securities is regulated by the industrial policy of the Government consolidatedunder circular (D/o IPP F. No. 5(14)/2009-FC) dated March 31, 2010 (“Consolidated FDI Policy”)released by the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry andnotifications issued by RBI from time to time. Under the Industrial Policy of the Government, unlessspecifically restricted, foreign investment is freely permitted in all sectors of Indian economy up to any extentand without any prior approvals, but the foreign investor is required to follow certain prescribed procedures andreporting requirements for making such investment. Under the Government of India’s sector specific guidelines,FDI in our Company may be up to 100% subject to the provisions of the Electricity Act, 2003.The chapter 4 of the Consolidated FDI Policy provides the method of calculating foreign investment in anIndian company.Foreign investment is defined broadly and includes investment by FIIs and NRIs, and foreign investmentin the form of American depositary receipts, global depositary receipts, foreign currency convertiblebonds, convertible preference shares and convertible currency debentures.The Consolidated FDI Policy specifies that all investments made directly by a non-resident entity in anIndian company would be considered as foreign investment. Further, in relation to an investment by anIndian company in another Indian company, if (i) the investing Indian company is owned and controlledby resident Indian citizens, and (ii) foreign entities do not own or control the investing Indian company,then the foreign investment in the investing Indian company will not be considered for calculation of theforeign investment in the second Indian company. However, if the requirements under (i) and (ii) aboveare not satisfied, then the entire investment of the investing Indian company in the second Indian companybeing invested in will be considered foreign investment.Pursuant to the Consolidated FDI Policy, an investing company shall be considered (i) “owned” byresident Indian citizens or foreign entities if more than 50% of its equity interest is beneficially owned byresident Indian citizens or foreign entities, as the case may be, and (ii) “controlled” by resident Indiancitizens or foreign entities if the resident Indian citizens or foreign entities, as the case may be, have thepower to appoint a majority of its directors.The Consolidated FDI Policy provides guidelines relating to downstream investments by Indian companiesthat have foreign investment. These guidelines are based on the principle that downstream investments by233

Indian companies owned or controlled by foreign entities should follow the same rules as those applicableto direct foreign investment. In respect of downstream investments by Indian companies that are notowned or controlled by foreign entities, there would not be any restrictions.For the purpose of downstream investments, the Consolidated FDI Policy classifies Indian companies intoone of three groups: (i) operating companies, (ii) operating-and-investing companies and (iii) investingcompanies. In connection with foreign investment in these categories of Indian companies, theConsolidated FDI Policy provides that:(a) in respect of an operating company, foreign investment in an operating company will need tocomply with the terms and conditions for foreign investment in the relevant sector(s) in which suchcompany operates;(b) in respect of an operating-and-investing company, foreign investment in such a company willneed to comply with the terms and conditions for foreign investment in the relevant sector(s) in whichsuch company operates. Further, the Indian company into which downstream investments are made willneed to comply with the terms and conditions for foreign investment in the relevant sectors in which suchIndian company operates; and(c) in respect of an investing company, an “investing company” has been defined under theConsolidated FDI Policy as an Indian company holding only direct or indirect investments in other Indiancompanies other than for trading of such holdings. Any foreign investment in such company will requirethe prior approval of the FIPB.the Consolidated FDI Policy further provides that foreign investment in an Indian company that does nothave (i) any operations, and (ii) any downstream investments, will require the prior approval of the FIPB.234

SECTION VIII- MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATIONThe Articles of Association of our Company inter alia provide for the following:Share CapitalThe share capital of the Company is Rs. 70 billion (Rupees Seventy Billion only) divided into7,000,000,000 Equity Shares. The authorised share capital of the Company was increased from Rs. 10billion to Rs. 22 billion vide EGM held on June 6, 1997 and further increased to Rs. 45 billion vide 11thAGM held on September 20, 1999. Vide 21 st AGM held on September 10, 2009, the authorised shareCapital was further increased to Rs. 70 billion and face value of shares was sub-divided from Rs.1000 pershare to Rs. 10per Share. The Form 5 with respect to increase in Authorised Capital was filed on September16, 2009. Further, Form 5 for sub-division of face value of shares from Rs. 1,000 to Rs. 10 was filed onSeptember 17, 2008.Increase, Reduction and Alteration of Capitali. Subject to the provisions of the Act the Company in General Meeting, may increase the sharecapital by such sum to be divided into shares of such amount as the resolution shall prescribe.ii. New shares shall be issued upon such terms and conditions and with such rights and privilegesannexed thereto as the general meeting resolving upon the creation whereof shall direct. Providedthat no shares (not being preference share) shall be issued carrying voting rights or rights in thecompany as to dividend, capital or otherwise, which are disproportionate to the rights attaching tothe holders of other shares (not being preference shares).Any debentures, debenture-stock or othersecurities may be issued at a discount, premium or otherwise and may be issued on condition thatthey shall be convertible into shares of any denomination and with any privileges and conditions asto redemption, surrender, drawing, allotment of shares, attending (but not voting) at the GeneralMeeting, appointment of Directors and otherwise Debentures with the right to conversion into orallotment of shares shall be issued only with the consent of the Company in the General Meetingby a Special Resolution.iii. The new shares (resulting from an increase of capital as aforesaid) may be issued or disposed of inaccordance with the provisions of Article 6.iv. Except so far as otherwise provided by the conditions of issue or by these Articles, any capitalraised by the creation, of new shares shall be considered, part of the original capital and shall besubject to the provisions herein contained with reference to the payment of calls and instalments,transfer and transmission, forfeiture, lien, surrender, voting and otherwise.v. Subject resolution to the provision of Section 100-104 of the Act, the Company may, from time totime, by Special, reduce its capital by paying off capital or cancelling capital which has been lostor is unrepresented by available assets or is superfluous or by reducing the liability on the shares orotherwise as may deem expedient, and capital may be paid off upon the footing that it may becalled upon, again or otherwise, and the Board may, subject to the provisions of the act, acceptsurrenders of shares.vi. Subject to the provisions of the Act the Company in a General Meeting, may from time to timesub-divide or consolidate its shares or any of them and exercise any of the other powers conferredby Sub-Section (i) (a) to (e) of Section 94 of the Act, and shall file with the Registrar such noticein exercise of any such powers as may be required by the Act.Further Issue of sharesi. Where at the time after the expiry of two years from the formation of the Company or at any timeafter the expiry of one year from the allotment of shares in the Company made for the first timeafter its formation, whichever is earlier, it is proposed to increase the subscribed capital of theCompany by allotment of further shares either out of the unissued capital or out of the increasedshare capital then:235

ii.a. Such further shares shall be offered to the persons who at the date of the offer, are holdersof the equity shares of the Company, in proportion as near as circumstances admit, to thecapital paid-up on that shares at the date.b. Such offer shall be made by a notice specifying the number of shares offered and limitinga time not being less than thirty days from the date of the offer and the offer if notaccepted, will be deemed to have been declined.c. The offer aforesaid shall be deemed to include a right exercisable by the personconcerned to renounce the shares offered to them or any of them in favour of any otherperson and the notice referred to in sub clause (b) hereof shall contain a statement of thisright. deletedd. After expiry of the time specified in the aforesaid notice or on receipt of earlier intimationfrom the person to whom such notice is given that he declines to accept the sharesoffered, the Board of Directors may dispose of them in such manner as they think mostbeneficial to the company and to such person(s) as they may think, in their sole discretion,fit.Notwithstanding anything contained in sub-clause(1) hereof, the further shares aforesaid maybe offered to any person (whether or not those persons include the persons referred to inclause (a) of sub-clause (1) hereof in any manner whatsoever:a. If a special resolution to that effect is passed by the Company in General Meeting, orb. Where no such special resolution is passed, if the votes cast (whether on a show of handsor on a poll as the case may be) in favour of the proposal contained in the resolutionmoved in the general meeting (including the casting vote, if any, of the chairman) by themembers who, being entitled to do so, vote in person, or where proxies are allowed, byproxy, exceed the votes, if any, cast against the proposal by members, so entitled andvoting and the Central Government is satisfied on an application made by the Board ofDirectors in this behalf that the proposal is most beneficial to the Company.iii. Nothing in sub-clause (c) of (1) hereof shall be deemed :a. to extend the time within which the offer should be accepted; orb. To authorise any person to exercise the right of renunciation for a second time on theground that the person in whose favour the renunciation was first made has declined totake the shares comprised in the renunciation.iv.Nothing in this Article shall apply to the increase of the subscribed capital of the Companycaused by the exercise of an option attached to the debenture issued or loans raised by theCompany:i. To convert such debentures or loans into shares in the Company; orii. To subscribe for shares in the Company (whether such option is conferred in theseArticles or otherwise)Provided that the terms of issue of such debentures or the terms of such loans include a term providingfor such option and such term:a. either has been approved by the Central Government before the issue of the debentures orthe raising of the loans or is in conformity with the rules, if any, made by thatGovernment in this behalf; andb. in the case of debentures or loans or other than debentures issued to or loans obtainedfrom Government in this behalf, has also been approved by a special resolution passed bythe Company in General Meeting before the issue of the debentures or raising of theloans.Allotment of Sharesi. Subject to the provisions of Section 81 of the Act and these Articles, the shares in the capitalof the Company for the time being shall be under the control of the Directors who may issue,allot or otherwise dispose of the same or any of them to such persons, in such proportion andon such terms and conditions and either at a premium or at par or (subject to the compliancewith the provisions of Section 79 of the Act) at a discount and at such time as they may fromtime to time think fit and subject to the provisions of section 77A of the Act with the sanctionof the Company in the General Meeting to give to any person or persons the option or right tocall for any shares either at par or premium during such time and for such consideration as theDirectors think fit, and may issue and allot shares in the capital of the Company on payment infull or part of any property sold and transferred or for any services rendered to the Company236

in the conduct of its business and any shares which may so be allotted may be issued as fullypaid-up shares and if so issued shall be deemed to be fully paid shares.Provided that option or right to call of shares shall not be given to any person or persons without thesanction of the Company in the General Meeting.ii.Notwithstanding anything to the contrary contained in the Act or these Articles, after any issuewhere the securities are dealt with by a Depository, the company shall intimate the detailsthereof to the depository immediately on allotment of such securities.Forfeiture and Lieni. (a) The Company shall have a first and paramount lien upon all the shares/debentures (otherthan fully paid-up shares / debentures and in case of partly paid shares / debentures thecompany's lien shall be restricted to moneys called or payable at a fixed time in respect ofsuch shares/ debentures) registered in the name of each member/ debentureholder (whethersolely or jointly with others) and upon the proceeds of sale thereof for all moneys (whetherpresently payable or not) called or payable at a fixed time in respect of suchshares/debentures and no equitable interest in any share/ debenture shall be created exceptupon the footing and condition that this Article will have full effect. Any such lien shallextend to all dividends, bonuses and interest from time to time declared / accrued in respectof such shares / debentures. Unless otherwise agreed the registration of a transfer of shares /debentures shall operate as a waiver of the company's lien, if any, on suchshares/debentures. The Directors may at any time declare any shares / debentures wholly orin part to be exempt from the provisions of this clause.(b) The Company may sell, in such manner as the Board thinks fit, any shares or debentures onwhich the Company has a lien provided that no sale shall be made :i. Unless a sum in respect of which the lien exists is presently payable, orii. Until the expiration of 14 days after a notice in writing stating and demandingpayment of such part of the amount in respect of which the lien exists as ispresently payable, has been given to the registered holder for the time being of theshare or debenture or the person entitled thereto by reason of his death orinsolvency.(c) (i) To give effect to any such sale the Board may authorise some persons to transfer theshares or debentures sold to the purchaser thereof.(ii) The purchaser shall be registered as the holder of shares or debentures comprised inany such transfer.(d) (i) The proceeds of the sale shall be received by the Company and applied in paymentof such part of the amount in respect of which the lien exists as is presentlypayable.(ii) The residue, if any, shall be subject to a lien for sums not presently payable asexisted upon the shares or debentures before the sale be paid to the person entitledto the shares or debentures at the date of the sale.ii. If a member or debenture-holder fails to pay any call or the allotment money which wasdeferred or kept as term deposit as a condition of subscription or instalment of a call on theday appointed for payment thereof, the Board may, at any time thereafter during such timeas any part of the call or allotment money or instalment remains unpaid serve a notice onhim requiring payment of so much call or instalment as is unpaid, together with any interestwhich may have accrued.iii. The notice aforesaid shall :a. name a further day (not being earlier than the expiry of fourteen days from the date ofservice of the notice) on or before which the payment required by the notice is to bemade; andb. state that, in the event of non-payment on or before the day so named, the shares ordebentures in respect of which the call was made will be liable to be forfeited.c. If the requirements of any such notice as aforesaid are not complied with any share ordebenture in respect of which the notice has been given, may at any time thereafter,before the payment required by the notice has been made, be forfeited by a resolutionof the Board to that effect.237

iv. A forfeited share or debenture may be sold or otherwise disposed of on such terms and in suchmanner as the Board thinks fit.v. At any time before a sale or disposal as aforesaid, the Board may cancel the forfeiture on suchterms as it thinks fit.vi. (i) A person whose shares or debentures have been forfeited shall cease to be a memberor holder in respect of the forfeited shares or debentures, but shall notwithstandingthe forfeiture, remain liable to pay to the Company all moneys which, at the date offorfeiture, were presently payable by him to the company in respect of the share ordebenture.(ii) The liability of such person shall cease if and when the Company shall have receivedpayment in full of all such moneys in respect of the shares or debentures.vii. i) A duly verified declaration in writing that the declarant is a Director, Manager or theSecretary of the Company, and that a share or debenture in the Company has beenduly forfeited on the date stated in the declaration, shall be conclusive evidence ofthe facts therein stated, as against all persons claiming to be entitled to the share ordebenture.(ii) The Company may receive the consideration, if any, given for the share or debentureon any sale or disposal thereof and may execute a transfer of the share or debenturein favour of the persons to whom the share or debenture is sold or disposed of.(iii) The transferee shall thereupon be registered as the holder of the share or debenture.(iv) The transferee shall not be bound to see to the application of the purchase money, ifany, nor shall his title to the share or debenture be affected by any irregularity orinvalidity in the proceedings in reference to the forfeiture, sale or disposal of theshare or debenture.(v) The provision of these regulations as to forfeiture shall apply in the case of nonpaymentof any sum which, by the term of issue of a share or debenture, becomespayable at a fixed time, whether on account of the nominal value of the share ordebenture or by way of premium, as if the same had been payable by virtue of a callduly made and notified.Transfer and transmission of sharesi.a. Subject to the provisions of the Listing Agreements between the Company and the StockExchanges, in the event that the proper documents have been lodged, the Company shallregister the transfer of securities in the name of the transferee except;i. When the transferee is in exceptional circumstances, not approved by theDirectors in accordance with the provisions contained herein;ii. When any statutory prohibition or any attachment or prohibitory order of acompetent authority restrains the Company from transferring the securities out ofthe name of the transferor; when the transferor objects to the transfer provided heserves on the company within a reasonable time a prohibitory order of a court ofcompetent jurisdiction.b. Subject to the provisions of Section 111A, these Articles and other applicable provisionsof the Act or any other law for the time being in force, the Board may refuse whether inpursuance of any power of the company under these Articles or otherwise to register thetransfer of, or the transmission by operation of law of the right to, any shares or interest ofa member in shares or debentures of the Company. The Company shall within one monthfrom the date on which the instrument of transfer, or the intimation of such transmission,as the case may be, was delivered to Company , send notice of the refusal to the transfereeand the transferor or to the person giving intimation of such transmission, as the casemay be, giving reasons for such refusal. Provided that registration of transfer shall not berefused on the ground of the transferor being either alone or jointly with any other orpersons indebted to the Company on any account whatsoever except when the Companyhas a lien on the shares.c. The instrument of transfer shall be in writing and all provisions of Section 108 of theCompanies Act, 1956 and statutory modification thereof for the time being shall be dulycomplied with in respect of all transfer of shares and registration thereof.238

ii.iii.iv.d. No fee shall be charged for registration of transfer, transmission, probate, successioncertificate and letters of administration, certificate of death or marriage, power of attorneyor similar other document.e. A common form of transfer of shares or debentures as the case may be, shall be used bythe CompanyThe Company shall keep the Register of Transfer of Shares and Transfer of Debentures andtherein enter the particulars of several transfers or transmission of any share or debenture.The instrument of transfer of any share or debenture in the company shall be executed both bythe transferor and transferee, and the transferor shall be deemed to remain holder of the shareor debenture until the name of the transferee is entered in the Register of Members ordebenture-holder in respect thereof.A nominee, upon production of such evidence as may be required by the Board and subject ashereinafter provided, elect, eitheri.to be registered himself as holder of the Share/Bond/ Debenture or Deposits, asthe case may be; orii. to make such transfer of the Share/Bond/Debenture or deposits, as the case maybe, as deceased Share/Bond/ Debentureholder or Depositor could have made;iii. if the nominee elects to be registered as holder of the Share/Bond/Debenture orDeposits, himself, as the case may be, he shall deliver or send to the Company anotice in writing signed by him stating that he so elects and such notice shall beaccompanied with the death certificate of the deceasedShare/Bond/Debentureholder or Depositor, as the case may be;iv. a nominee shall be entitled to the same dividends and other advantages to whichhe would be entitled to, if he were the registered holder of theShare/Bond/Debenture or Deposits except that he shall not, before beingregistered as a member in respect of his Share/Bond/ Debenture or Deposits beentitled in respect of it to exercise any right conferred by membership in relationto meetings of the Company.Provided further that the Board may , at any time, give notice requiring any such person to elect either to beregistered himself or to transfer the Share/Bond/Debenture or Deposits , and if the notice is not compliedwith within ninety days, the Board may thereafter withhold payment of all dividends, bonuses or othermoneys payable or rights accruing in respect of the Share/Bond/ Debenture or deposits, until therequirements of the notice have been complied with.v. Nothing contained in Article 9 shall prejudice any power of the Company to register asshareholder /debenture holder any person to whom the right to any share / debenture in theCompany has been transmitted by operation of law.Dematerialisation of Securitiesi. Notwithstanding anything contained in these Articles, the Company shall be entitled todematerialise or dematerialise its shares, debentures and other securities (both present andfuture) held by it with the Depository and to offer its shares, debentures and other securitiesfor subscription in a dematerialised form pursuant to the Depositories Act, 1996 and the Rulesframed thereunder, if any.ii. Every person subscribing to securities offered by the Company shall have the option to receivethe security certificates or to hold the securities with a Depository. Such a person who is thebeneficial owner of securities can at any time opt out of a Depository, if permitted by law, inrespect of any security and the Company shall, in the manner and within the time prescribedprovided by the Depositories Act, 1996 issue to the beneficial owner the required Certificatesof Securities.iii. If a person opts to hold his security with a depository, then notwithstanding anything to thecontrary contained in the Act or in these Articles, the Company shall intimate such Depositorythe details of allotment of the security and on receipt of the information, the Depository shallenter in its record the name of the allottee as the beneficial owner of the security.iv. All securities held by a Depository shall be dematerialised and shall be in fungible form.Nothing contained in Section 153 of the Act. shall apply to a Depository in respect ofsecurities held by it on behalf of the beneficial owners.239

v. (i) Notwithstanding anything to the contrary contained in the Act or in these Articles, aDepository shall be deemed to be the registered owner for the purposes of effecting transfer ofownership of security on behalf of the beneficial owner.(ii) Save as otherwise provided in (i) above, the Depository as the registered owner of thesecurities shall not have any voting rights or any other rights in respect of the securities heldby it.(iii) Every person holding securities of the company and whose name is entered as thebeneficial owner in the records of the Depository shall be deemed to be amember/debentureholder, as the case may be, of the Company. The beneficial owner ofsecurities shall be entitled to all the rights and benefits and be subject to all the liabilities inrespect of his securities which are held by a Depository.vi. Notwithstanding anything to the contrary contained in the Act or in these Articles to thecontrary, where securities are held in a Depository, the records of the beneficial ownershipmay be served by such Depository on the Company by means of electronic mode or bydelivery of floppies or discs.Directorsi. The President shall, from time to time, determine the number of Directors of the Companywhich shall not be less than six(6) and not more than fifteen(15). Some of the Directors maybe whole-time functional Directors and others may be part-time Directors depending upon therequirement from time to time. One of the part-time Directors shall be nominated by theGovernor.Provided the number of Independent directors in any case shall not be less than 50% of the actual strengthof the Board.ii.a. The Chairman, the Vice-Chairman and all other members of the Board of Directors(except part-time Directors) shall be appointed by the President.Till the time Directors are appointed, the Subscribers shall be deemed to be Directors ofthe Company.b. The part-time Directors shall be appointed by the President from time to time, as providedfor in Article 31 supra.iii. The President may from time to time, appoint the Chairman or any of the Directors to theoffice of the Managing Director(s) of the Company for such term and remuneration (whetherby way of salary or other- wise) as he may think fit. Any such Chairman/ Director appointedto any such office shall, If he ceases to hold the office of Chairman/Director from any cause,iv.ipso facto, immediately cease to be Managing Director(s).The Directors shall be paid such salary and/or allowance as the President may, from time totime, determine. Subject to the provisions of Section 314 of the Act, such reasonableadditional remuneration, as may be fixed by the President, may be paid to any one or more ofthe Directors for extra or special services rendered by him or them or otherwise;v. Two-third (any fraction to be rounded off to the next number) Directors of the Company shallbe persons whose period of office shall be liable to determination by rotation and save asotherwise expressly provided in the Act, be appointed by the Company in General Meeting.At every Annual General Meeting of the Company held next after the date of General Meetingin which first Directors are appointed, in accordance with section 255 of the Act, one-third ofsuch Directors for the time being liable to retire by rotation or if their number is not three or amultiple of three, than the number nearest to one-third, shall retire from office.Directors to retire by rotation at every Annual General Meeting shall be those(other than theChairman cum Managing Director of the Company and such other non-retiring Directors, ifany) who have been longest in Office since their last appointment but as between persons whobecome Directors on the same day, those who are to retire shall, unless otherwise agreedamong themselves, by determined by lot.A retiring Director shall be eligible for re-election. The Company at the Annual GeneralMeeting in which Director retires, may fill-up the vacated office by appointing the retiringDirectors or some other person thereto.If the place of retiring Director is not so filled up and the meeting has not expressly resolvednot to fill the vacancy, the meeting shall stand adjourned till the same day in the next week, atthe same time and place, or if that day is a public holiday, at the same time and place, and if at240

the adjourned meeting also , the place of retiring Director is not filled up and that meeting alsohas not expressly resolved not to fill the vacancy, the retiring Director shall be deemed to havebeen re-appointed at the adjourned meeting, unless;(i) at that meeting or at the previous meeting, a resolution for the re-appointment of suchDirector has been put to the meeting and lost.(ii) The retiring Director has by a notice in writing addressed to the Company or its Board ofDirectors, expressed his unwillingness to be so re-appointed.(iii) he is not qualified or is disqualified for appointment.(iv) A resolution, whether special or ordinary, is required for his appointment by virtue of anyprovisions of the Act.(v) The proviso to sub-section (2) of Section 263 is applicable to the case.vi.vii.viii.ix.A Director representing a Ministry of the Government of India or any AdministrativeDepartment of the Government of Himachal Pradesh shall retire on his ceasing to be an officerof that Ministry/Administrative Department.The President may, at any time, remove any part-time Director, from office of his absolutediscretion. However, the President shall consult the Governor in cases where such part-timeDirector was appointed from the nominations received from the Governor. Chairman andwhole-time functional Directors may be removed from office by the President in accordancewith the terms of appointment or if no such terms are specified, on the expiry of three months'notice issued in writing by the President, or with immediate effect on payment of the pay inlieu of the notice period.The President shall have the right to fill any vacancy of the office of the Directors includingChairman & Managing Director appointed by him, caused by removal, resignation, death orotherwise and to substitute any Director, including Chairman in place of existing Director.In place of a Director who is out of India or is about to go out of India and who expects to beabsent for not less than three months from the State in which meetings of the Board areordinarily held, the President may appoint, in consultation with the Chairman of the Company,any person to be an Alternate Director during his absence out of India or his absence for notless than three months from the State in which the meetings of the Board are ordinarily heldand such appointee, whilst he holds office as an Alternate Director, shall be entitled to noticeof meetings of the Board and to attend and to vote thereat accordingly.Powers of the Boardi. Subject to the provisions of Sections 292 and 293 of the Act, the Board may, from time totime, entrust and confer upon the Chairman, Managing Director, Director for the time being,such of the powers as it may think fit and may confer such powers for such time and to beexercised for such objects and purpose and upon such terms and conditions and with suchrestrictions as it may think expedient and may, from time to time, revoke, withdraw, alter orvary all or any such powers.ii. The Board/ Chairman shall exercise all such Powers as are applicable to Mini Ratnacompanies and all such powers as applicable to Nav Ratna, upon such status as and whenbestowed subject to adherence of to the stipulations, guidelines, notifications, circulars as maybe issued from time to time by the Department of Public enterprises or any other Departmentof the Government of India governing the status of Mini Ratna/ Nav Ratna companies.iii. The Chairman shall reserve for decision of the President, any proposals or decisions of theBoard of Directors or any matter brought before the Board which raises, in the opinion of theChairman, any important issue and which is on that account fit to be reserved for the decisionof the President (who shall decide in consultation with the Governor where considerednecessary), and no decision on such an important issue shall be taken in the absence of theChairman appointed by the President.iv. Without prejudice to the generality of the above provision, the Board shall reserve for thedecision of the President any matter related to:a. Agreement involving foreign collaboration proposed to be entered into by the Company.b. The Company's revenue budget in case there is an element of deficit which is proposed tobe met by obtaining funds from the Government.c. The annual and five year annual plans for development of the Company's capital budget.241

d. Winding up of the Company.e. Sale, lease, disposal or otherwise of the whole or substantially the whole of theundertaking of the Company.v. No action shall be taken by the Company in respect of any proposal or decision of ,theDirectors reserved for the approval of the President until his approval to the same has beenobtained. The President shall have the power to modify such proposal or decision of theDirectors.Dividendsi. The profits of the Company available for payment of dividend subject to any special rightsrelating thereto created or authorised to be created by these presents and subject to theprovisions of the Act and these presents as to the reserve fund and amortisation of capital shallbe divisible among the members in proportion to the amount of capital paid-up by themrespectively. Provided always that (subject as aforesaid) any capital paid-up on a share duringthe period in respect of which a dividend is declared shall only entitle the holder of such shareto an apportioned amount of such dividend as from the date of payment.ii. No dividend shall be declared or paid by the company for any financial year except out ofprofits of the company for that year arrived after providing for the depreciation in accordancewith the provisions of sub-section (2) of section 205 of the Act or out of profits of thecompany for any previous financial year or years arrived after providing for the depreciationin accordance with applicable laws and remaining undistributed or out of both or out ofmoneys provided by the government for the payment of dividend in pursuance of a guaranteegiven by the government. No dividend shall carry interest against the Company.iii. For the purpose of the last preceding article, the declaration of the dividend as to the amountof the profits of the company shall be conclusive.iv. Subject to the provisions of section 205 of the Act as amended, no dividend shall be payableexcept in cash.v. A transfer of shares shall not pass the right to any dividend declared thereon after transfer andbefore the registration of the transfer.vi. Any one of the several persons who are registered as the joint holders of any shares, may giveeffectual receipts for all dividends and payments on account of dividends in respect of suchshares.vii. Unless otherwise directed any dividend may be paid by cheque or demand draft or warrant orsuch other permissible means to the registered address of the member or person entitled or inthe case of joint holding, to the registered address of that one whose name stands first in theregister in respect of the joint holding and every cheque, demand draft or warrant so sent shallbe made payable to the member or to such person and to such address as the shareholder or thejoint shareholders in writing may direct.Where the Company has declared a dividend but which has not been paid or claimed within 30 days fromthe date of declaration, transfer the total amount of dividend which remains unpaid or unclaimed withinthe said period of 30 days, to a special account to be opened by the company in that behalf in anyscheduled bank, to be called “________Unpaid Dividend Account”Any money transferred to the unpaid dividend account of a company which remains unpaid or unclaimedfor a period of seven years from the date of such transfer, shall be transferred by the company to the Fundknown as Investor Education and Protection Fund established under section 205C of the Act. Nounclaimed or unpaid dividend shall be forfeited by the Board.The Company in a General Meeting may declare a dividend to be paid to the members according to theirrespective rights and interest in the profits and may fix the time for payment but no dividend shall exceedthe amount recommended by the Board.The Directors may from time to time, pay to the members such interim dividends as in their judgement theposition of the Company justifies.242

SECTION IX – OTHER INFORMATIONMATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTIONThe following contracts (not being contracts entered into in the ordinary course of business carried on byour Company or entered into more than two years before the date of this Red Herring Prospectus) which areor may be deemed material have been entered or to be entered into by our Company. These contracts,copies of which have been attached to the copy of this Red Herring Prospectus, delivered to the Registrar ofCompanies for registration and also the documents for inspection referred to hereunder, may be inspected atthe Registered Office of our Company from 10.00 am to 4.00 pm on Working Days from the date of thisRed Herring Prospectus until the Bid/Offer Closing Date.Material Contracts to the Offer1. Offer Agreement dated February 25, 2010 amongst our Company, the Selling Shareholder and theBRLMs;2. Agreement dated February 24, 2010 amongst our Company, the Selling Shareholder and Registrarto the Offer;3. Escrow Agreement dated [●] amongst our Company, the Selling Shareholder, the BRLMs, EscrowCollection Banks, and the Registrar to the Offer;4. Syndicate Agreement dated [●] amongst our Company, the Selling Shareholder, the BRLMs andSyndicate Members;5. Underwriting Agreement dated [●] amongst our Company, the Selling Shareholder, the BRLMsand Syndicate Members;Material Documents1. Our Memorandum and Articles of Association as amended from time to time;2. Our certificate of incorporation dated November 11, 2002;3. Resolutions of the Board dated April 13, 2010 noting the Letter from MoP dated April 13, 2010.4. Letter dated April 13, 2010 from the MoP to our Company approving the Offer;5. Resolution of the Board of Directors dated February 25, 2010 and April 13, 2010 approving theDraft Red Herring Prospectus and the Red Herring Prospectus respectively;6. Resolution of the IPO Committee dated February 25, 2010 and April 14, 2010 approving the DraftRed Herring Prospectus and the Red Herring Prospectus respectively;7. Letter No. 23/24/2009-H-II dated February 17, 2010 from the MoP to our Company authorisingMr. R.K. Gupta Director (H), MOP to, inter alia, execute, sign and deliver such deeds, documentsand agreements and to do all such acts, deeds required for the purpose for effecting the offer forsale by the GoI of its shareholding in our Company;8. Approval issued by the Foreign Investment Promotion Board, Ministry of Finance vide letter no.6\23\2010-FJU dated April 13, 2010;9. Copies of the letters by the MoP, GoI for appointment and remuneration of our Directors;10. MoP letter no. 13/14/2005 – H.II dated July 18, 2005 regarding the terms and conditions ofappointment of our Chairman and Managing Director, Mr. Hemant Kumar Sharma. Following theresignation of Mr K.K Garg as a Director of our Company with effect from November 3, 2009, MrHemant Kumar Sharma assumed the additional charge of Director, Finance.243

11. MoP letter no. 13/20/2005-H-II dated July 4, 2007 regarding the terms and conditions ofappointment of our Director (Personnel), Mr Rajinder Singh Katoch.12. Resolution of the Board of Directors dated February 16, 2010 appointing Mr P.S.R Murthy asCompliance Officer;13. Statement of Tax Benefits dated February 18, 2010, and the Report of the Auditors, Hingorani M.& Co. Chartered Accountants dated April 13, 2010, prepared as per Indian GAAP and mentionedin this Red Herring Prospectus;14. Copies of annual reports of our Company for the past five financial years;15. Consents of the Auditors, Hingorani M. & Co., Chartered Accountants, for inclusion of their reporton accounts and Statement of Tax Benefits in the form and context in which they appear in thisRed Herring Prospectus;16. Consents of Bankers to our Company, BRLMs, Syndicate Members, Registrar to the Offer, Bankerto the Offer, IPO Grading Agency, Refund Bankers, Domestic Legal Counsel to our Company,International Legal Counsel to our Company, Domestic Legal Counsel to the Underwriters,Directors of our Company, Company Secretary and Compliance Officer, as referred to, in theirrespective capacities;17. Applications dated March 5, 2010 for in-principle listing approvals from BSE and NSE,respectively;18. In-principle listing approvals from BSE and NSE dated March 11, 2010 and March 12, 2010,respectively;19. Due diligence certificate to SEBI from BRLMs, dated February 26, 2010;20. SEBI observation letter no. CFD/DIL/ISSUES/SM/200603/2010 dated March 31, 2010;21. IPO Grading Report and Rationale by CARE dated March 31, 2010;22. Agreement dated April 6, 2010 amongst NSDL, the Company and Registrar to the Offer;23. Agreement dated April 9, 2010 amongst CDSL, the Company and Registrar to the Offer;24. Letters dated March 30, 2010 from BRLMs intimating SEBI and the stock exchanges of theappointment of independent Directors and constitution of the Investor Grievance Committee toensure Company’s compliance with clause 49 of the listing agreement.25. RBI confirmation dated April 15, 2010 confirming that it has no objection to the transfer of415,000,000 Equity Shares by the President of India, acting through the Ministry of Power,Government of India.Key Contracts in relation to the business of our Company1. Agreement between our Company and GoHP dated October 20, 2004, for the Rampur HydroElectric Project;2. Implementation agreement between our Company and Government of Uttaranchal (now known asGovernment of Uttarakhand) dated November 21, 2005, for the implementation of the JakholSankri Hydro Electric Project;3. Implementation agreement between our Company and Government of Uttaranchal (now known asGovernment of Uttarakhand) dated November 21, 2005, for the implementation of the DevasariHydro Electric Project;244

4. Implementation agreement between our Company and Government of Uttaranchal (now known asGovernment of Uttarakhand) dated November 21, 2005, for the implementation of the NaitwarMori Hydro Electric Project;5. MoU between our Company and the GoHP dated October 27, 2008, for the Dhaulasidh HydroElectric Project;6. MoU between our Company and Government of Nepal dated March 2, 2008, for the Arun7. -3 Hydro Power Project; and8. PPA dated July 29, 2003 entered into by the Company with Power Development Department,Government of Jammu and Kashmir;9. PPA dated February 28, 2003 entered into by the Company with Rajasthan Rajya Vidyut PrasaranNigam Limited as amended on May 9, 2004 whereby the beneficiary was substituted by thedistribution licensees of Rajasthan i.e. Ajmer Vidyut Prasaran Nigam Limited, Jaipur VidyutPrasaran Nigam Limited, and Jodhpur Vidyut Prasaran Nigam Limited;10. PPA dated December 18, 2002 entered into by the Company with Engineering Department,Chandigarh Administration;11. PPA dated October 31, 2005 entered into by the Company with GoHP;12. PPA dated March 31, 2003 entered into by the Company with HPSEB;13. PPA dated October 24, 2002 entered into by the Company with PSEB;14. PPA dated December 22, 2005 entered into by the Company with Uttaranchal Power CorporationLimited;15. PPA dated January 14, 2003 entered into by the Company with Haryana Vidyut Prasaran NigamLimited;16. PPA dated March 27, 2003 entered into by the Company with Delhi Transco Limited; and17. PPA dated April 19, 2004 entered into by the Company with Uttar Pradesh Power CorporationLimited.18. Agreement dated December 22, 2009 between the Department of Energy, Royal Government ofBhutan and the Company;19. Indemnity agreement dated April 6, 2009 between the Company and Power Grid Corporation ofIndia Limited; and20. Memorandum of Understanding dated March 15, 2010 between the Ministry of Power and theCompany.Any of the contracts or documents mentioned in this Red Herring Prospectus may be amended or modifiedat any time if so required in the interest of our Company or if required by the other parties, withoutreference to the shareholders subject to compliance of the provisions contained in the Companies Act andother relevant statutes.In accordance with Section 61 of the Companies Act, in the event any of the material contracts mentionedin this section are required to be modified or amended, post the filing of the Prospectus with the RoC,reference shall be made to the shareholders of our Company for the same.245

DECLARATIONWe, the Directors, certify that all the relevant provisions of the Companies Act and the regulations andguidelines issued by the Government of India or the Securities and Exchange Board of India as applicable,have been complied with and no statement made in this Red Herring Prospectus is contrary to theprovisions of the Companies Act, the Securities and Exchange Board of India Act, 1992 or rules orregulations issued there under, as the case may be and that all approvals and permissions required to carryon the business of our Company have been obtained, are currently valid and have been complied with. Wefurther certify that all statements in this Red Herring Prospectus are true and correct.1. Signed by all Directors1. Mr. Hemant Kumar SharmaChairman & Managing Director2. Mr. Rajinder Singh KatochWhole Time Director (Personnel)3. Mr. Raghunath Prasad SinghWhole Time Director (Electrical)4. Mr. Sudhir KumarNon-Executive Director - GOI Nominee5. Mr. Deepak SananNon-Executive Director - GOHP Nominee6. Mr. Kamaljit Singh GillIndependent Director7. Mr. SM LodhaIndependent Director8. Mr. Kambhampati Subramanya SarmaIndependent Director9. Mr Ravi DhingraIndependent Director10. Ms Bharti PrasadIndependent Director[-Sd][-Sd][-Sd][-Sd][-Sd][-Sd][-Sd][-Sd][-Sd][-Sd]2. Signed By The General Manager (Finance And Accounts)[-Sd]K.S. MalhotraGM (F&A)3. Signed by the Selling ShareholderWe certify that all statements in respect of the Selling Shareholder are true and correct.For the President of India, Director (H), Ministry [-Sd]of Power, Government of IndiaMr. Rajiv GuptaDirector (H)Dated: April 16, 2010Place: New Delhi246

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